SC Global (Developer of the Marq) Plans to Delist from the Stock Exchange

[rymccondo77]

From Channel News Asia:

Property tycoon Simon Cheong is taking his flagship company SC Global Developments private and has made a cash offer of S$1.80 a share.

The offer price values the luxury property developer, SC Global, at approximately S$745 million.

It is also at a 49.4 percent premium to its last traded price of $1.205 on November 30.

Mr Cheong currently holds a 55.06 percent stake in SC Global and plans to de-list the company from the Singapore Exchange.

He is making the offer through his wholly-owned investment holding company, MYK Holdings Pte Ltd.

A company filing to the Singapore Exchange said Mr Cheong believes the offer represents an attractive opportunity for shareholders to exit and realise their investment for cash.

Among the reasons for taking the company private is the low trading liquidity of the shares.

SC Global's trading liquidity has been thin with an average daily trading volume of about 243,282 shares or 0.06 percent of the issued share capital over the last 12 months.

The company said such low liquidity limits the usefulness of a public listing.

It adds that the privatisation will also allow management to have greater flexibility to manage and plan its residential property development business.

This because the company will not need to report its performance on a quarterly basis and will be dispensed from listing-related expenses.

Market watchers said the move may be linked to the weaker performance in the luxury property segment.

SC Global has also reportedly seen rising inventory levels in unsold units at its key development The Marq on Paterson Hill.

A unit at the development was sold in August for S$19 million, or S$6,394 psf.

Analysts have also said that SC Global shares are looking cheap considering the value of its unsold inventory of luxury properties.

This means its current market capitalisation of just S$508 million is less than the estimated profits it would rake in from the sale of its unsold units at The Marq.

DBS Bank has been appointed as financial adviser to the offeror.

http://www.channelnewsasia.com/stori...medium=twitter

[kane]

Delist already can come back and relist at a better price next time when the property stocks are hot.

[hopeful]

...
It adds that the privatisation will also allow management to have greater flexibility to manage and plan its residential property development business.
....

This means its current market capitalisation of just S$508 million is less than the estimated profits it would rake in from the sale of its unsold units at The Marq.
.....

1) want to be next FEO?
No foreign shareholder = no need for Qualifying Certificate = no 5 year limit to sell properties = no taxes on unsold units after completion.

2) wow, profits from the sale of unsold Marq units is so damn high?

and curious about valuation and profits.
how can they assume the estimated profits of unsold units? The units remained unsold for simple reason - there is lack of buyers.

if they use this value ~ $6000psf for remaining Marq units, the taxes on unsold Marq units would be equally high?

[roly8]

why would a company delist from SGX?

could it be bad news to come for the company?

[buttercarp]

why would a company delist from SGX?

could it be bad news to come for the company?

No not necessarily true.
Allgreen also delist form SGX last year.
Some companies delist cos they wanna go private.
Actually I dunno what it really means.
Then usually before they delist, the shares will go up.

[chestnut]

No not necessarily true.
Allgreen also delist form SGX last year.
Some companies delist cos they wanna go private.
Actually I dunno what it really means.
Then usually before they delist, the shares will go up.

Sis, when a coy wants to go delist, there are a few reasons, but mainly they want absolute control - they dont need to answer to shareholders. Another is, the value of the stock in their opinion is undervalue - not fair value...

The shares go up when they want to delist, because the main share holder needs to buy up the minority and for that to happen, the major share holder needs to dangle a carrot (premium) for the minority to let go of the shares..

This is in a nutshell. There are numerous reasons, but typically, this are the main reasons.

[buttercarp]

Sis, when a coy wants to go delist, there are a few reasons, but mainly they want absolute control - they dont need to answer to shareholders. Another is, the value of the stock in their opinion is undervalue - not fair value...

The shares go up when they want to delist, because the main share holder needs to buy up the minority and for that to happen, the major share holder needs to dangle a carrot (premium) for the minority to let go of the shares..

This is in a nutshell. There are numerous reasons, but typically, this are the main reasons.

Thanks bro !
So to delist is a good sign that the company is doing well and the major shareholder wants it all to himself!

[chestnut]

Thanks bro !
So to delist is a good sign that the company is doing well and the major shareholder wants it all to himself!

One of the reasons... But in this case, I tend to agree with hopeful...

For general delist, the major share holder needs a lot of money leh...

And if the share volume small, not much trading, they sell their shares also no value...

But if listed in US is totally different hor... You must read up on Creative decision to delist from US... Too much maintenance amount...

[hopeful]

Not sure of the formula, but based on this article
http://www.stproperty.sg/articles-pr...adline/a/94213

it is
1st year - 8%
2nd year -16%
3rd year - 24%
of the property purchase price.

from same article, both project by SC Global
Marq 33 unsold out of 66 = 50%
Hilltops 196 unsold out of 241 = 81%

http://www.squarefoot.com.sg/market-watch/enbloc-market
Marq purchase price is $266million
Hilltops purchase price is $294million

For Marq
1st year extension charges = 266 x 50% x 8% = 10.64million
2nd year extension charges = 266 x 50% x 16% = 21.28million
3rd year = 31.92million

For Hilltops
1st year extension charges = 294 x 81% x 8% = 19.05million
2nd year extension charges = 294 x 81% x 16% = 38.10million
3rd year = 57.15million

if my assumptions and formula are correct, these charges will eat up their 10% deposit and whatever profits they have in 2013,2014,2015

is it any wonder he wants to take it private, devoid of foreign shareholder and foreign director?

If I hold shares in SC Global, I wouldnt want to sell my share, I would force SC Global to sell Marq and Hilltops cheaper.

[Shanhz]

looks like the writing was on the wall.
anyone here astute enuff to spot it would have bought into SCG in the last 2 weeks

will wheelock be the next one?

[Shanhz]

looks like the writing was on the wall.
anyone here astute enuff to spot it would have bought into SCG in the last 2 weeks

will wheelock be the next one?

just realised wheelock is majority HK company.. too bad

[ilgr]

you can call it a premium over the current share price, but essentially for a mandatory offer, the offer by the offeror or any parties acting in concert with the offeror, must not be less than the highest price paid by them for any share during the offer period and in 6 months leading up to the beginning of the offer period.

[reporter2]

http://www.straitstimes.com/premium/...-firm-20121206

SC Global CEO launches $745m bid to de-list firm

Simon Cheong says taking the firm private will give it more flexibility

Published on Dec 06, 2012

By Magdalen Ng


SC Global Developments chief Simon Cheong has launched a $745 million cash bid to take the luxury property developer private.

Mr Cheong, the chairman and chief executive, said a market listing was making little sense given that SC Global had not raised funds from the capital markets for six years and few of its shares are traded each day.

Going private would also give the firm more flexibility and relieve it of public listing requirements, including reporting quarterly results, he said.

Mr Cheong has offered $1.80 a piece for all outstanding ordinary shares via his wholly-owned investment holding company MYK Holdings.

The offer price is at a 39.5 per cent premium over the highest closing price for SC Global shares in the past 12 months, and a 49.4 per cent premium over the last closing price of $1.205 on Nov 30 before the company requested a trading halt pending an announcement.

The offer price also represents the highest premium offered for a property company in Singapore in the past five years.

For the deal to go through, Mr Cheong will have to own at least 90 per cent of the company's shares.

It is unclear if major shareholder Wheelock Properties, which has a 16 per cent stake, will accept the offer.

Wheelock Properties bought a 10 per cent stake in 2007, paying $6 per share. A stock split exercise subsequently turned each share into two, effectively recalibrating Wheelock's purchase price to $3 a share.

Wheelock later upped its stake in SC Global in the open market, buying some shares for well-below $1 apiece.

The property firm did not reply to The Straits Times' queries by press time.

Mr Cheong controls a 55.06 per cent stake in the company.

The offer price of $1.80 is also higher than the average target price of $1.24 set by six analysts.

AmFraser Securities analyst Lau Wei Chong was the only one with a target price higher than the offer price, at $1.98.

He said: "While the offer price is below our fair value, I believe that based on the current market scenario, given the fact that the high-end property market has not really moved, it will be quite a good price.

"I think some shareholders who had bought earlier at higher prices would be looking at a loss, but they have got to be realistic because the markets have changed. We are not in 2007, when the high-end property market was the forerunner."

Urban Redevelopment Authority data shows that prices of private homes rose 0.6 per cent in the third quarter from the same period a year ago.

But prices in the core central region, where SC Global operates, crept up by only 0.1 per cent.

In its third-quarter financial results, SC Global said the continued rounds of cooling measures over the past two years have made potential buyers cautious.

A number of listed property counters, such as Allgreen Properties, have exited the stock market in recent years due to low liquidity and depressed valuations.

[email protected]

[Wild Falcon]

Mainly delist so no need to be answerable to public shareholders and less disclosure requirement. So can left pocket sell to right pocket, achieve high PSF and keep value artificially high while units remain unsold. Can be less transparent - that is the value of delisting.

[proud owner]

Mainly delist so no need to be answerable to public shareholders and less disclosure requirement. So can left pocket sell to right pocket, achieve high PSF and keep value artificially high while units remain unsold. Can be less transparent - that is the value of delisting.

That's why FEO is never listed


They can hold their unsold units for as long as they can and no analyst will ever downgrade their share due to massive unsold units. Right?

[radha08]

That's why FEO is never listed


They can hold their unsold units for as long as they can and no analyst will ever downgrade their share due to massive unsold units. Right?

they only got to pay stamp duty for the unsold units...

[teddybear]

Ai yo yo, you all think too far already.
The 1 and only reason to delist a listed company is because: The offer price is much lower than the real realizable value of the company itself! Nobody is going to pay more to the shareholders to get less value!
Don't you see why listed company only get delisted when their share prices are low near historical lows.....

Mainly delist so no need to be answerable to public shareholders and less disclosure requirement. So can left pocket sell to right pocket, achieve high PSF and keep value artificially high while units remain unsold. Can be less transparent - that is the value of delisting.

[kane]

That's why FEO is never listed


They can hold their unsold units for as long as they can and no analyst will ever downgrade their share due to massive unsold units. Right?

Feo don't need public capital. Heh. That's thw main difference.

[chestnut]

Look at the book value...

See their price/book value ratio

http://www.securities.com/Public/com...n_1693834.html

Look at this chart. At $1.8 it is still 0.8 of book value
http://investing.businessweek.com/re...ticker=SCGD:SP

[kane]

Look at the book value...

See their price/book value ratio

http://www.securities.com/Public/com...n_1693834.html

Look at this chart. At $1.8 it is still 0.8 of book value
http://investing.businessweek.com/re...ticker=SCGD:SP

Lots of developrs are trading around the 1x price to book. Back in the good old days, it saw 3x price to book.

[heehee]

The "book" may not have been revalued or revalued very "conservatively"...

Lots of developrs are trading around the 1x price to book. Back in the good old days, it saw 3x price to book.

[reporter2]

http://www.businesstimes.com.sg/prem...price-20121207

Published December 07, 2012

Simon Cheong offer lifts SC Global price

Major shareholder Wheelock also sees its shares rise almost 4%

By Mindy Tan


SHARES of SC Global Developments surged 60 cents, or almost 50 per cent, to close trading at $1.805 yesterday, surpassing chairman and chief executive Simon Cheong's voluntary unconditional cash offer of $1.80 a share.

This represents the highest price achieved in more than 2.5 years.

Mr Cheong said on Wednesday that he planned to delist SC Global, as this would provide greater flexibility to manage and plan the business. But for the plan to go through, Mr Cheong will have to own at least 90 per cent of the company's shares. To that end, he acquired an additional 12.8 million shares yesterday, at $1.80, bringing the total number of shares owned, controlled, or agreed to be acquired, to 240.6 million, or about 58.16 per cent.

Wheelock Properties (Singapore), which holds a 15.8 per cent stake in SC Global, also saw its counter rise during yesterday's trading.

SC Global's second-largest shareholder after Mr Cheong, Wheelock Properties, saw its share price rise 7.5 cents, or 3.9 per cent, to $1.985.

Asked if the company would accept the offer, Tan Bee Kim, senior executive director of Wheelock Properties (Singapore) Limited, said: "It would be presumptuous to have any view on the matter before we have full chance to review the offer in detail."

Market watchers largely agreed that while the offer price was at a discount to the revalued net asset value (RNAV), it represents a decent premium given the sluggish sales in the high-end residential segment.

The offer price is at a 59 per cent premium to the expected price prior to the offer, said UOB-Kay Hian, even as it noted that the offer price is at a 13 per cent discount to its RNAV of $2.06 per share.

However, weak luxury market conditions, potential negative impact from the imposition of extension charges and government policy overhang will make it difficult for SC Global to realise the full RNAV over the near to medium term, it said.

"Based on our calculations, the worst-case extension charge could be more than $200 million over next three years if there are no additional sales from its projects The Marq on Paterson Hill, Hilltops and Martin No. 38," said the brokerage.

AM Fraser said the privatisation offer was timely, since the company "lacks catalysts to unlock share value otherwise".

"Even though the offer price is 9 per cent lower than our fair value ($1.98), the offer still presents a rare opportunity to unlock value for current shareholders," it said.

Said DMG and Partners Security: "The offer is at a 50 per cent discount to our latest RNAV of $3.65 per share, but represents a decent premium given the sluggish sales for the high-end residential segment and the company's deliberate low turnover strategy."

Beyond setting benchmark prices for its luxury residential projects, SC Global has been known to hold prices in spite of pressure to move sales.

According to a report by Credit Suisse in October, the sluggish pace of sales is expected to continue. Specifically, prime properties in the core central region can expect demand to slow further, following the latest round of cooling measures, given the higher down-payment required (for investors affected by the lower loan-to-value ratio), or higher mortgage instalments, which can be expected to increase 13-21 per cent depending on tenure.

[reporter2]

http://www.straitstimes.com/premium/...fails-20121207

SC Global could lose $72m if privatisation bid fails

Published on Dec 07, 2012

By Magdalen Ng


LUXURY property developer SC Global could lose an estimated $71.7million next year if the bid to take it private by chairman Simon Cheong fails, says a Maybank-Kim Eng report.

Mr Cheong - also its chief executive, who controls a 55.06 per cent stake - launched an unconditional $745million cash offer for the shares he does not own on Wednesday. This works out to about $1.80 a share.

SC Global will incur the losses as not all of its shareholders and directors are Singaporean, which means it is required to sell its units within two years of completion. Wheelock Properties, which has a Hong Kong parent company, owns a 16per cent stake.

The rule, in the Residential Property Act, gives such developers up to five years to build a project and requires them to sell all units within two years of getting a temporary occupation permit. Developers unable to sell their units within the two-year period have to pay extension charges of 8 per cent of the property purchase price for the first extra year.

The property purchase price is pro-rated based on the proportion of unsold units. The extension charges for the subsequent two years are 16per cent and 24per cent of the property purchase price, respectively.

Maybank-Kim Eng's estimate of SC Global's losses next year is based on the firm being required to pay extension charges. SC Global's expected loss is calculated based on the number of unsold units at each development, and the consequent pro-rated property purchase price.

For example, more than 80 per cent of SC Global's 241-unit Hilltops, remained unsold at the end of September. It has until June next year to sell the remaining 196 apartments.

The fate of SC Global's privatisation is likely to depend on major stakeholder Wheelock Properties, which bought most of its shares at a substantially higher price in 2007.

Wheelock was coy when asked if it found the offer attractive.

"It would be presumptuous to have any view on the matter before we have full chance to review the offer in detail," senior executive director Tan Bee Kim told The Straits Times.

Wheelock bought a 10 per cent stake at $6 per share. There was a subsequent stock split exercise which recalibrated Wheelock's purchase price to $3 apiece.

According to the Maybank-Kim Eng report, Wheelock's write-down cost of investment in SC Global shares at end-2011 was $64.8 million, which works out to about $1 a share.

This could be possible, as Wheelock bought SC Global shares on the open market after 2007, buying some shares for well below $1 each.

SC Global shares rose 60 cents to $1.805 yesterday, from its last closing price before the Nov 30 trading halt. Some 15.1 million shares changed hands, the highest daily volume in the stock's history.

[email protected]

[Ringo33]

Ai yo yo, you all think too far already.
The 1 and only reason to delist a listed company is because: The offer price is much lower than the real realizable value of the company itself! Nobody is going to pay more to the shareholders to get less value!
Don't you see why listed company only get delisted when their share prices are low near historical lows.....

the other reason is to avoid paying the 8% ABSD for unsold units.

If SC goes private, they could off load the unsold unit to some individual and only pay 3% ABSD.

[chestnut]

So is Simon reacher today on his past 50% holdings? What is his net worth today compared with before this? Hahahaha

[kane]

Suddenly they are becoming a victim of their own success in sellig at record high prices. 8% of their own record heh.

[Komo]

all these are just tricks to make more money at the expense of u and me. those theory about control, liquidity blah blah blah are just bs

[hyenergix]

Miscal demand for luxury units. D9 D10 popularity has been declining.

[chestnut]

Miscal demand for luxury units. D9 D10 popularity has been declining.

So do u buy when it is down or do u buy when it is up???

Hahahaha

[hyenergix]

So do u buy when it is down or do u buy when it is up???

Hahahaha

I buy only when I have excess $. Newbie in property. Can't afford D9 n D10 anyway.