SINGAPORE – The general offer to privatise mainboard-listed Raffles United is “not fair and not reasonable”, the independent financial adviser (IFA) for the company’s independent directors said on Friday (July 26).

But Raffles United is slated to be delisted; its free float has already fallen below 10 per cent.

At the end of Thursday, offeror Raffles Infinity, which is owned by Raffles United executive director Teo Xian-Hui Amanda Marie, had taken control of 91.16 per cent of Raffles United’s issued shares, together with concert parties.

To be sure, Ms Teo and concert parties already controlled 86.17 per cent of Raffles United when the offer was announced, constituting “super majority control” over the company, the IFA noted.

Ms Teo is the daughter of Raffles United managing director Teo Teng Beng.

In a circular published on Friday, IFA Asian Corporate Advisors advised minority shareholders to reject Ms Teo’s 6.5 cents per share cash offer.

The financial terms of the offer are not fair, the IFA said: “The offer price is at a steep discount of approximately 71.9 per cent from the group’s adjusted RNAV (revalued net asset value) and/or RNTA (revalued net tangible asset value) per share.”

Furthermore, the offer values Raffles United at only 0.3 times NAV, lower than the median of 1.0 times NAV for Singapore stocks that were successfully privatised by way of a general offer since 2017.

The offer price is not reasonable either, the IFA said, since the offer premiums over the historical prices for Raffles United’s shares are generally “less favourable” than the simple average and median for Singapore stocks that were successfully privatised by way of a general offer since 2017.

Ms Teo’s offer price represents a premium of 18.6 per cent and 22 per cent respectively above the volume-weighted average price (VWAP) per share for the one-month and three-month periods before the offer was made on July 1.

In contrast, the median premiums for selected successful privatisations was 29.5 per cent over the one-month VWAP and 29.1 per cent over the three-month VWAP.

Nevertheless, shareholders who reject the offer should note the risk of holding suspended or delisted shares, the IFA said. “It is likely to be difficult for shareholders who do not accept the offer to sell their shares in the absence of a public market.”

The offer will close at 5.30pm on Aug 14. The offeror has stated that it will not revise the offer price.

Raffles United, formerly known as Kian Ho Bearings, is not affected by changes to the voluntary delisting rules effected by the Singapore Exchange on July 11 to shift voting power to minorities.

This is because Raffles United is delisting by way of a general offer, not a voluntary delisting.

The latter involves shareholders voting on a delisting resolution at an extraordinary general meeting.