The offer by Chip Eng Seng’s controlling shareholders to take the construction and property firm private has received acceptances that gives the offerors control over 77.29% of the stake as of Jan 16.
Second Chance Properties is a shareholder whom has accepted the 75 cents per share offer.
Known for years as a listed company with a portfolio of retail properties that gives it a steady rental income stream, Second Chance has in recent years shifted its focus to investing in securities and collecting dividend instead.
The value of Second Chance Properties’ ownership of Chip Eng Seng shares was disclosed when it responded to Singapore Exchange’s query why it had chosen to stop offering scrip dividends and paying out its shareholders with cash only instead.
Second Chance had declared a final dividend of one cent per share, which will go ex on Feb 1 and be paid to entitled shareholders on March 29.
In its response on Jan 16, Second Chance says that its proceeds from accepting the offer for its Chip Eng Seng shares would amount to $12.7 million. In contrast, the total amount it is obliged to pay is $9.26 million.
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In addition, Second Chance expects to receive a further $5.4 million from the sale of a property, bringing the total impending cash infusion to $18.1 million, and reducing its gearing to below the current level of 0.26.
According to Second Chance, many of its shareholders who opted for dividends in the past had “complained” about the dilution as other shareholders chose to take scrip instead.
“Furthermore there will be cost savings in distributing cash dividends instead of scrip dividends,” the company adds.
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In its Jan 9 quarterly portfolio update, Second Chance notes that as of Nov 30, Chip Eng Seng was its second-largest holding, taking up 4.19% of its total fair value of $246 million.
The largest holding, as of Nov 30, was Hong Kong quoted CITIC, constituting 4.42% of the fair value. The third, fourth and fifth largest holdings are China Mobile, China Citic Bank and Singapore Telecommunications, with 4.17%, 4.06% and 3.79% respectively.
Second Chance shares closed on Jan 16 unchanged at 25 cents, and up 11.36% over the past year.