CosmoSteel CEO questions takeover offer, says it does not represent fair value

3HA Capital's offer 'made under potentially misleading premises'

- Kang Wan Chern Deputy Business Editor

The chief executive of CosmoSteel Holdings has spoken out against an offer to acquire all the shares of the company, amid more active efforts by shareholders to ensure they secure a fair deal in such situations.

Mr Ong Tong Hai, together with his brother Ong Tong Yang and their father Ong Chin Sum, told The Straits Times on May 30 that they are "deeply concerned" over the 20 cents per share voluntary conditional cash offer by 3HA Capital on May 15.

The three are long-term shareholders of CosmoSteel Holdings with a combined 26 per cent stake.

The offer is conditional on 3HA Capital holding over 50 per cent of CosmoSteel's issued shares by the closing date of the offer, which will be announced in an offer document to be dispatched no later than June 5. An independent financial adviser (IFA) will be appointed in due course.

"We believe the offer does not represent fair value for shareholders and is made under potentially misleading premises," the Ongs said in a statement to ST.

"We urge shareholders to carefully consider and evaluate the offer and stand with us in protecting the long-term interests of all shareholders."

The Ongs noted that 3HA Capital had highlighted the risk of CosmoSteel being suspended from trading or delisted for being on the SGX watch list since June 2018 as one of the reasons shareholders may prefer a cash exit.

However, the offer price does not account for the proposed abolishing of the watch list by Singapore Exchange Regulation and its confirmation that no listed company would be forced to delist or suspend trading pending the review, they said.

The bourse regulator on May 15 said it is consulting the public on scrapping the watch list for loss-making mainboard companies as part of efforts to reduce regulatory friction and encourage price discovery.

The Ongs added that "the offer price grossly undervalues CosmoSteel's recovery trajectory, assets, and growth potential".