Property developer Hongkong Land has proposed to delist its 77.4 percent-owned subsidiary MCL Land from the Singapore Exchange and buy the remaining shares that it does not own at $2.45 apiece, representing a 25.6 percent premium from MCL’s last trading at $1.95.
HongKong Land said the delisting will provide the company with greater operational flexibility in handling its residential property development activities within the region.
“Hongkong Land currently has no intention to propose any major changes to the businesses of the company; redeploy the fixed assets of the company; or discontinue the employment of the employees of the company and its subsidiaries,” said a joint statement issued by both companies.
The statement also cited small free float, compliance costs of maintaining a listing and the low trading liquidity of MCL as bases for the proposed delisting.
“The exit offer presents stockholders with an opportunity to realise their entire stockholding for cash at an attractive premium,” it added.
MCL has not also raised funds through the SGX for at least 10 years and is not likely to require access to financial markets to fund its operations in the future.
The exit offer will be made by N M Rothschild & Sons (Singapore) and Standard Chartered Bank on behalf of HKL (MCL) Pte Ltd, HongKong Land’s indirect wholly-owned subsidiary that currently owns the 77.4 percent stake at MCL.
Both the exit offer and delisting will be subject to the approval of at least 75 percent of shareholders at MCL. In addition, at least 10 percent of MCL shareholders should not vote against the delisting resolution, while the exit offer will not be dependent on the minimum number of acceptance being received by HKL (MCL).
When fully accepted, the exit offer will lead to a payment of approximately $205 million (US$151 million) by Hongkong Land.
As of August 25, market capitalisation of MC Land was about $721 million.