Tuan Sing offers A$213.4m for rest of Grand Hotel

Singapore Companies
Published November 3, 2006

Tuan Sing offers A$213.4m for rest of Grand Hotel
Its A$1.10 a share offer is 29% more than M'sian group Mulpha's A$0.85


By ANGELA TAN

RATHER than see its associate Grand Hotel Group (GHG) undergo a proposed asset sale in response to a takeover bid by a Malaysian group, Tuan Sing Holdings has made an offer to buy the remaining 74.96 per cent stake in CHG that it does not already own for A$213.4 million (S$257.3 million).


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GHG's operations: Tuan Sing already owns 25.04 per cent of GHG, which operates Hyatt hotels in Australia

Tuan Sing, whose primary business activities are property, technology and industrial services, already owns 25.04 per cent of GHG, the operator of Hyatt hotels in Australia.

Its offer, through indirect wholly owned subsidiary Tuan Sing (Australia), translates to A$1.10 for each share in the five-star hotel investment trust and values GHG at about A$285 million.

The A$1.10 a share offer is 29 per cent more than an earlier bid of 85 Australian cents a share by Malaysian group Mulpha International Bhd, but still below GHG's market price of about A$1.26.

However, Tuan Sing - controlled by Indonesian tycoon Sjamsul Nursalim's family - said its bid offered greater certainty to shareholders compared with GHG's plan to sell its hotels after its rejection of Mulpha's A$220 million offer.

Tuan Sing highlighted concerns under GHG's break-up plan, including tax, timing and fee issues, that might cut the sale proceeds.

'Having regard to these issues, we believe that our offer provides an alternative which is superior and reflects fair and certain value for existing GHG security holders,' Tuan Sing said.

Tuan Sing said GHG's shares had traded below net book value for most of the past nine years and trading in the shares had been thin.

'TSA (Tuan Sing Australia) believes that an alternative to the stapled securities structure of GHG would be more suitable for operating a hotel business and that GHG should be privatised,' it said in a statement to the Singapore Exchange (SGX), adding that it believes it would be able to revamp GHG and unlock value for the benefit of all the parties involved.

Yesterday, GHG told shareholders not to respond to the offer until it has reviewed the bid. A condition of the Tuan Sing bid is that GHG shareholders do not vote to approve the sale of the company's assets. GHG was going to seek shareholder approval on Nov 28 for a plan to sell its four Hyatt hotels, two Chifley hotels and one Country Comfort hotel in Australia, aiming to fetch more than their current net tangible asset value of A$1.33 a share.

GHG said yesterday it has received a number of unsolicited approaches from parties interested in either acquiring CHG or its portfolio of hotels. But there is currently no certainty that a binding proposal will be received, it added.

'It remains the current intention to seek security-holder approval at the AGM to pursue an ordely realisation of assets,' chairman Bill Conn said.

Meanwhile, Mulpha has said it will let its offer lapse on Nov 7.

Tuan Sing plans to fund its acquisition with loan facilities entered into with Australia and New Zealand Banking Group Limited. ANZ Investment Bank is the financial adviser to Tuan Sing for the purchase.

Singapore Companies
Published November 10, 2006

Reject Tuan Sing bid, Grand Hotel directors urge
They say offer undervalues the Australian group


By CONRAD RAJ

INDEPENDENT directors of Australia's Grand Hotel Group (GHG) have called for the A$213 million (S$255 million) buyout offer by Singapore-listed Tuan Sing to be rejected.


Tuan Sing (Australia), which already has a 25 per cent stake in the target company, announced its offer to buy out the rest of GHG for a cash consideration of A$1.10 for each GUH share on Nov 2, valuing the property group - which owns four Hyatt hotels, two Chifley hotels and one Country Comfort hotel - at A$285 million (S$343 million).

'This offer materially undervalues GHG and does not maximise value for all securityholders. The independent directors recommend that security holders reject this inadequate and opportunistic offer,' said GHG chairman Bill Conn in a statement.

Tuan Sing's offer is 29 per cent more than an earlier bid of 85 Australian cents a share by Malaysian group Mulpha International Bhd, but still below GHG's current market price.

But Tuan Sing - controlled by the family of Indonesian tycoon Sjamsul Nursalim - said its bid offered greater certainty to shareholders compared with GHG's plan to break up the group and sell its hotels after it rejected Mulpha's A$220 million offer.

In coming to their decision, the independent directors said they were mindful that Tuan Sing's offer price represented a 17 per cent discount to GHG's net tangible assets of A$1.33 a share, and a 12 per cent discount to the last traded price of A$1.255 before the offer was made. The shares closed at A$1.275 on Wednesday.

They pointed out that the offer was conditional on Tuan Sing getting at least 90 per cent of GHG and that the motion in relation to the orderly realisation of assets was not approved at GHG's forthcoming AGM, due on Nov 28.

They also disclosed that GHG had received unsolicited 'approaches'' from other parties who expressed interest in acquiring the company or its hotels.

'Being able to pursue the orderly realisation of GHG's assets is fundamental to the board's ability to maximise value for all securityholders. Pursuing this process does not preclude interested parties from seeking to acquire the group as a whole, and the board will consider proposals from third parties in relation to the entire group which reflect full value for GHG stapled securities,'' Mr Conn's statement said.

Responding to Tuan Sing's concern that GHG's break-up plan might not be carried out in time to be tax-effective for shareholders, GHG's independent directors said that, based on expert advice, they were confident they could complete the asset sales in a tax-efficient manner.

They also said they were in the process of appointing an experienced real estate agent to manage the sales in 'an expeditious and cost effective manner'.

The break-up plan needs 50 per cent support when GHG shareholders vote on it.

According to Reuters, Babcock & Brown Ltd, which owns just under 15 per cent of GHG, said last week that it was likely to vote for the break-up unless someone made an offer close to A$1.33 a share.