SC Global / Wheelock

SC Global / Wheelock: Surprise move – Wheelock accepts Simon Cheong's offer. SC Global’s chairman and CEO Simon Cheong has succeeded in his bid to take the luxury developer private, thanks to a surprise move by Wheelock to sell its entire 17.9% stake to him. Wheelock said it was disposing of its stake "in light of recent market developments and new investment opportunities" and that it "will in due course reinvest the proceeds in alternative projects". It added that it was awarded a large residential site in Ang Mo Kio Avenue 2 for $550m last week and "would be focusing its attention to make it one of the most distinctive homes in the Ang Mo Kio area". For Mr Cheong, yday's acceptances of his offer, which totalled 80.8m shares (incl Wheelock's stake), together with market purchases of ~ 1.5m shares, took his stake in SC Global to 90.36%. Under the Takeover Code, Mr Cheong will be able to compulsorily acquire the remaining shares he does not already own. The public float outstanding is 9.64%, below the 10% threshold to maintain a listing. With Wheelock no longer a shareholder, it now means that SC Global could potentially avoid forking out up to $72m in penalties for its remaining unsold units. This is because under rules passed in 2011, developers with foreign shareholders must sell all the units in a project within two years after the project receives its TOP. Wheelock has a Hong Kong parent company. Separately, Mr Cheong's cash offer has been extended by a further 14 days to Jan 30. SC Global shares will be suspended after the close of the offer. Shareholders who do not accept the offer within this period can wait for the court-sanctioned compulsory acquisition process, which will normally take another one-and-a-half months to complete. Wheelock had earlier raised its stake in SC Global through purchases, saying that in its assessment, the current share price represents a discount of some 40 – 50% of RNAV. Nevertheless, Wheelock still stands to book a gain of $92.55m At $1.91 last close, Wheelock trades at 10.6x P/E, 0.75x P/B, offers 3.1% yield.