The controlling shareholder of Hong Kong-listed Kingston Financial Group Ltd, an investor in the Macau casino sector, has proposed taking the firm private, offering to investors HKD0.30 (US$0.03821) per share.
According to a Monday evening filing, the offeror is Active Dynamic Ltd, a British Virgin Islands company wholly-owned by Pollyanna Chu Yuet Wah, the chief executive and co-founder of the group. She is also controlling shareholder of Kingston Financial, with a stake of just above 74.6 percent in the company, according to the filing.
Ms Chu is acting in concert with other shareholders, controlling in aggregate a nearly 74.93-percent stake in Kingston Financial.
The firm had halted its share trading on October 14, pending a release of inside information. Trading in its shares resumed on Tuesday morning.
Kingston Financial has interests in the Macau satellite casinos Casa Real, on the city’s peninsula, and Grandview in Taipa. The venues are to continue offering gaming until at least December 31, coinciding with the extended gaming rights up to that date of the licence provider, SJM Holdings Ltd.
According to Monday’s filing, on October 13, after trading hours, the offeror requested the board to put forward the proposal for the privatisation of the company via scheme of arrangement under Hong Kong’s Companies Act.
The bid represents a premium of “approximately 47.78 percent” over the closing price of HKD0.2030 per share on the last trading day, October 13, stated the filing. As the offerer only intends to acquire nearly 3.46 billion shares, the aggregate value of the deal should not exceed HKD1.04 billion. The transaction must be approved by at least 75 percent of the company’s independent shareholders.
Analyst Arun George, of Global Equity Research Ltd, said in a Tuesday note, carried on the Smartkarma platform, that the offer price of HKD0.30 per share, was “unattractive for long-term shareholders”.
Mr George said that was because the offer price was respectively at a discount of 83-percent, 81-percent, and 48-percent, to the 10-year, five-year, and three-year average share price.
“Notably, the share price exceeded the offer price as recently as 1 April 2022,” added the analyst.
Kingston Financial suggested in Monday’s filing that the privatisation effort by its controlling shareholder was because the business environment in which it operates was “under unprecedented significant challenge and uncertainty”.
The company said the “volatility in the financial markets” and “uncertainty” regarding economic growth and growing inflation were having a negative impact on the group’s securities brokerage, underwriting and placement services, as well as on its margin- and initial public offering-financing services.
Kingston Financial also flagged that its hotel and gaming businesses in Macau were constrained by travel restrictions “imposed by various cities” in mainland China. “It is uncertain when the negative impact on Macau’s tourism and gaming industry will end and when it will fully recover to pre-pandemic levels,” the group added.
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