Singapore investment firm Temasek Holdings has made an
offer to buy over and take SMRT private at $1.68 per share.
If successful, this means the rail and bus operator
will be delisted from the Singapore bourse.
The offer price is a premium over the company's last
share price of $1.545.
Temasek owns 54 per cent of SMRT, which is valued at
close to S$2.4 billion.
The news comes after the government announced last
Friday that it will take over all operating assets of the
North-South, East-West and Circle lines, as well as the Bukit
Panjang LRT Line, from SMRT for S$1.06 billion. This is the net
book value - or current value - of the assets, plus GST.
In a statement, Temasek and SMRT said they accept the
New Rail Financing Framework (NRFF), as part of a regulatory
transition.
However, "there remain significant business risks and
challenges, which are beyond the control of SMRT".
SMRT is expected to face challenges - even under the
new framework - with costs and uncertainties associated with an
ageing and expanded network, the statement noted.
SMRT will also need to focus on delivering on existing
and new multi-year programmes to support an ageing and expanded
network , including the need to deliver a higher order of rail
reliability and service in line with the heightened Maintenance
Performance Standards to be determined by the LTA
"Privatisation will provide SMRT greater flexibility to
focus on its primary role of delivering safe and high quality rail
service, without short term pressures of being a listed company, in
the midst of its transitionto a new regulatory framework under the
New Rail Financing Framework, " the statement said.
The deal has been structured as a scheme of
arrangement.
This offers more certainty to a potential buyer, who
will get all or none of the company.
Most takeover bids are made through a general offer,
which does not guarantee a 100 per cent stake even if the buyer
gains majority control.
For Temasek's bid to succeed, a majority of
shareholders present at a meeting have to vote for it. These
shareholders will have to hold at least 75 per cent of the value of
SMRT shares held by all shareholders present at the meeting.
Credit Suisse is advising Temasek on the deal, while
Bank of America Merrill Lynch is advising SMRT.
A trading halt of SMRT's shares was called last Friday,
and trading will resume on Thursday.
ST