KUALA LUMPUR (Jan 25): The Hwang family, which holds a 30.91% stake in Penang-based Suiwah Corp Bhd, is looking to take the company private at RM2.80 per share.
The privatisation will be done through a proposed selective capital reduction and repayment exercise (SCR).
In a filing with Bursa Malaysia, Suiwah said it has today received a letter from its major shareholder Suiwah Holdings Sdn Bhd (SHSB), which is the private investment vehicle of Suiwah managing director Datuk Hwang Thean Long who founded the group, and parties acting in concert (PAC), requesting for the group to undertake a SCR.
The corporate exercise involved the SCR and a corresponding capital repayment of a proposed cash amount of RM2.80 per share to entitled shareholders on an entitlement date to be determined later.
SHSB holds 12.01 million Suiwah shares or 20.97%, while Thean Long is the ultimate offeror in the privatisation, with a 7.76% stake. The PAC are Thean Long's wife Datin Cheah Gaik Huang (0.05%) and their daughter Hwang Siew Peng (0.86%) and son Hwang Shin Hung (1.15%) – who are executive directors of Suiwah – as well as Suiwah Supermarket Sdn Bhd (0.12%).
SHSB, has in the letter to Suiwah, said under the proposed SCR, the entitled shareholders own 39.55 million Suiwah shares and they will receive a capital repayment of RM110.75 million or RM2.80 per share.
At RM2.80, this is 62 sen or 28.4% above the closing price of RM2.18 on Jan 23 prior to the suspension of trading pending the release of today's announcement.
As at the last practical date of Jan 24, Suiwah's share capital is RM74.93 million after the reclassification of share premium to share capital – comprising 61 million shares.
Under the SCR, Suiwah's share capital would be reduced by up to RM110.75 million.
As the capital reduction is higher than the current share capital, a proposed bonus issue is proposed to increase the share capital so that it would be sufficient undertake the capital reduction and proposed SCR.
SHSB said the proposed SCR is expected to be funded by internal funds and bank facilities obtained by Suiwah.
It stated in the letter that the privatisation plan comes as Suiwah shares have been thinly traded, recording an average daily trading volume and average monthly trading volume of 15,456 shares and 160,067 shares respectively for the past two years, which represents 0.07% and 0.77% of Suiwah's total free float.
In addition, the listing status of Suiwah brings minimal benefit to the group and its shareholders, said SHSB.
"Suiwah has not undertake any major corporate exercise or fund raising activities through the capital market for the past 10 years and has relied entirely on internal funds and/or bank borrowings to maintain growth and grow its operations.
"The privatisation of Suiwah would also provide greater flexibility to Suiwah in managing and developing the existing businesses without regulatory restrictions and cost associated with being listed on Bursa," it added.
SHSB also said it had recently incurred and is committed to substantial capital expenditure into its three core businesses: retail, manufacturing, and property investment and development. "As a result, the dividend payment of Suiwah which has been on a decreasing trend will likely be reduced further," it said.
The offer will remain open for Suiwah board of directors’ acceptance until 5pm on Feb 11.
"The non-interested directors will deliberate on the proposed SCR and upon consultation with an independent adviser to be appointed will decide on the next course of action. Accordingly, a further announcement will be made in due course," said Suiwah.