http://www.businesstimes.com.sg/arch...-time-20130118

Published January 18, 2013

SC Global shares fall below buyout price for 1st time


[SINGAPORE] Shares of SC Global Developments Ltd, Singapore's luxury developer, fell yesterday after chief executive officer Simon Cheong raised his stake to 90.36 per cent, enabling him to delist the company.

The shares dropped 0.3 per cent to $1.795 at the close of trading. The stock closed below the offer price for the first time. MYK Holdings Pte Ltd, the investment vehicle for Mr Cheong and his partners, had offered to take SC Global private for $1.80 a share on Dec 5.

As the public float has fallen below the 10 per cent threshold to maintain a listing, Singapore Exchange will suspend the trading of shares after the final closing date of Jan 30, SC Global said yesterday.

Separately, SC Global's second-largest investor, Wheelock & Co, has tendered its shares in the offer.

"Wheelock was holding out for a better price," said Vikrant Pandey, a Singapore-based analyst at UOB Kay Hian Pte Ltd, which advised investors to sell SC Global shares in the offer. "After the new government measures, Wheelock would not have wanted too much variability and uncertainty so it would have decided to monetise its investment."

Singapore took additional steps last week to discourage speculation in real estate, requiring foreigners to pay an additional 5 per cent tax on property purchases and adding levies on second or third homes for Singaporeans.

Mr Cheong's $745 million buyout offer is "fair and reasonable", Prime Partners Corporate Finance Pte Ltd, an independent financial adviser, said on Dec 26, recommending that shareholders accept the offer, according to a circular sent to investors.

Traders had been betting that the most lucrative takeover offer in Singapore would get even sweeter for the luxury property developer. Since the offer, Wheelock had bought shares above the deal price.

As a company with foreign shareholders, SC Global faces fines for failing to sell units within two years of completing developments. That law is designed to ensure land in Singapore, an island state with a population of more than five million, isn't hoarded for speculation.

The stock rose to the highest in almost five years on Dec 17 after Wheelock said that it bought 1.07 million shares at S$1.81, exceeding Mr Cheong's offer price. It then added more shares, taking its holding in SC Global to 17.9 per cent. Wheelock, also a developer, said that it named Goldman Sachs Group Inc as its financial adviser in relation to Mr Cheong's offer.

Wheelock shares climbed 1.1 per cent to $1.93 in Singapore.

Amid fluctuating sales, SC Global reported losses for three of the four most recent quarters, and earnings are expected to fall 79 per cent in 2012, analysts' estimates compiled by Bloomberg show.

When Mr Cheong made the offer, he said that a private company would have more flexibility if it didn't have to report results on a quarterly basis and said that SC Global hasn't tapped capital markets in at least six years. - Bloomberg