苏小妹:
Chip Eng Seng's rights issue proposal = 大鱼吃小鱼 [供股（rights issue）纯粹为了让大股东吞吃小股东的利益]Elephant in the room: “Change of control” situations ~ 5 Sep 2019
https://governanceforstakeholders.com/2019/09/05/elephant-in-the-room-change-of-control-situations/
“if the EGM resolutions are passed, the controlling shareholders stand to receive about $1 million to carry out this rights issue that will likely allow them to increase their shareholdings beyond 30% without triggering the mandatory general offer. This seems like a case of having your cake and eating it too.”
Securities watchdog looking into billionaire couple' s purchase of Chip Eng Seng shares18 Sep 2019
THE Securities Industries Council (SIC), which administers Singapore's takeover code, is looking into the circumstances that saw billionaire couple Celine and Gordon Tang emerge as substantial shareholders of Chip Eng Seng in October last year.
"The SIC is looking into the acquisition of shares in the company in October 2018 by the relevant parties," the council said on Tuesday in response to queries from The Business Times.
"As our enquiry is on-going, we are not able to comment further at this point."
The Tangs forked out S$201 million to become Chip Eng Seng's largest shareholders last October, through married deals with members of Chip Eng Seng's controlling Lim family that were done at a premium to the market price.
However, the Tangs chose not to buy out the Lim family's entire stake. Instead, they bought enough to take their stake to 29.73 per cent.
By keeping their ownership below 30 per cent, the Tangs avoided having to buy out Chip Eng Seng's minority shareholders at the same price that the insiders were bought out.
So when Chip Eng Seng proposed a rights issue last month that will be sub-underwritten by the Tangs, corporate governance advocates raised concerns that the relatively unattractive rights offering could lead to the Tangs raising their stake to as high as 43.43 per cent of the enlarged issued capital, allowing them to strengthen their control over the property and construction group without paying minority shareholders a dime.The SIC declined to comment on why it is revisiting last year's married deals now.
In July, it greenlighted the Tangs' request to waive their obligation to buy out everyone if their ownership crosses 30 per cent as part of the rights issue.
The council's statement on Tuesday came after BT asked it to explain its rationale for the waiver.
Rule 14(6) of the takeover code requires the Tangs to make a takeover offer for Chip Eng Seng if the council judges that the couple have "a significant degree of control" over the voting rights of those insiders who sold them only part of their shares.
Corporate governance activists Mak Yuen Teen and Chew Yi Hong had argued in the pages of BT last week that the Tangs do indeed have effective control over the company, which they believe puts the rationale for the rights issue into question.
Even if the Tangs keep their ownership below 30 per cent, the code states that "the payment of a very high price for the voting rights would tend to suggest that control over the entire holding (of the sellers) was being secured", among other things.
The Tangs paid the Lims a premium of 26.5 cents (or about 33 per cent) to the average undisturbed price of 81.5 cents for their shares last year, wrote Prof Mak and Mr Chew, which works out to a control premium of about S$49 million.
Prof Mak said on Tuesday: "I think the issues of concert parties, partial sales, payment of a high price, independence of directors and corporate actions like the rights issue we saw in Chip Eng Seng need to be scrutinised. It's good if the SIC is looking at it."
When BT approached Chip Eng Seng's board of directors for comment on Tuesday, independent director Abdul Jabbar said: "As the acquisition of shares is a shareholder issue which does not involve the company and there is an enquiry by the SIC on going, it would not be appropriate for the board of CES (Chip Eng Seng) to comment on this.
"From CES' perspective, our corporate strategic growth plans and need for funding remain in place, and, barring any unforeseen developments, we intend to proceed with the rights issue as planned."
The SIC follows due process in its enquiries. It cannot halt a company's corporate actions without the backing of its findings.
Celine Tang, who is a non-executive and non-independent chairman of Chip Eng Seng, did not comment.
Gordon and Celine Tang reside in Singapore, and are reportedly close to the Bush family and Thailand's former prime minister Yingluck Shinawatra.
Mrs Tang is managing director of Singapore-listed SingHaiyi. Neil Bush, the brother of Jeb and former US president George W. Bush, chairs SingHaiyi.
The Tangs also own stakes in Singapore-listed Suntec Reit, ARA US Hospitality Trust, Eagle Hospitality Trust, Cromwell European Reit, OUE Commercial Reit and OKH Global.
Chip Eng Seng proposes rights issue to raise S$96m for expansion22 Aug 2019
MAINBOARD-LISTED developer Chip Eng Seng on Thursday said that it plans to do a renounceable underwritten rights issue of about 156.5 million new shares at S$0.63 each, to raise net proceeds of about S$96.3 million for its expansion plans.
This will be done on the basis of one rights share for every four existing shares in the company held by shareholders.
Proceeds will be used to finance the possible expansion of its property development business in Singapore and overseas, as well as to fund possible strategic investments and acquisitions in the education segment of its business, which is in line with the group' s recent diversification into the education sector.
Some money will also be used for the growth and operations of the group' s hospitality segment, as well as for general and working capital.
In support of the rights issue, controlling shareholder Celine Tang (also the company' s chairman), her husband Gordon Tang, as well as group CEO Chia Lee Meng Raymond, have given irrevocable undertakings to subscribe for their portion of shares, which constitute about 31.51 per cent of the total number of rights shares.
Mr and Mrs Tang have been granted approval by the Securities Industry Council of Singapore not to have to make a mandatory general offer, should their shareholding in the company rise above 30 per cent.
Ms Tang has a direct and deemed interest of 29.73 per cent in the company.
The price carries a 7.35 per cent discount to the closing price of S$0.68 per share on Aug 22, and a 5.97 per cent discount to the theoretical ex-rights price of S$0.67, assuming the completion of the rights issue, calculated based on the Aug 22 closing price.
Chip Eng Seng said it has considered other fundraising options, including further bank borrowings and debt instruments from financial institutions or debt issuances under its S$750 million Multicurrency Debt Issuance Programme, but found a rights issue to be the most " suitable" .
This is because its net debt-to-equity ratio is already about 1.8 times as at end-June 2019, and based on the three-year fixed rate notes issued in March 2019 under the programme, the cost of borrowing was 6 per cent per annum.
"The cost of borrowing depends on market conditions and may be higher for borrowings of a longer tenor," it said.
It has also calculated based on its last paid dividends and Aug 22 closing price, that the cost of equity would be cheaper at about 5.88 per cent per annum.
Therefore, a rights issue would strengthen the group' s financial position by improving its balance sheet and capital base, while reducing its net gearing, the firm added.
At the same time, it will give the group greater financial capacity and flexibility to capitalise on investment and expansion opportunities and allow it to respond to such opportunities quickly, it said.
Chip Eng Seng will be seeking approval from shareholders in an extraordinary general meeting to be convened to vote on the issuance, among other things.
United Overseas Bank has been appointed the manager and underwriter for the rights issue.
