PETALING JAYA: Tong Herr Resources Bhd is set for privatisation at RM2.55 per share after the company’s non-interested directors accepted a proposal from its major shareholders Allrich Corp and Richard Holdings Ltd.
According to a filing with Bursa Malaysia, the non-interested directors, after taking into consideration the advice of independent adviser Mercury Securities Sdn Bhd, on Monday resolved to table the proposed selective capital reduction and repayment exercise (SCR) to shareholders for consideration and approval at an extraordinary general meeting (EGM).
Under the proposal, entitled shareholders will receive RM2.55 cash for each Tong Herr share held, involving a total capital repayment of RM99.81 million.
The exercise involves the cancellation of 39.14 million shares held by entitled shareholders, representing 25.5% of Tong Herr’s shares in issue excluding treasury shares. The company will also cancel 3.91 million treasury shares.
Upon completion, the 114.38 million shares held by the non-entitled shareholders will represent 100% of Tong Herr’s issued share capital.
Allrich currently holds a 39.86% direct stake in Tong Herr, while Richard Holdings owns 31.95%. Collectively, the non-entitled shareholders hold 74.5% of the company’s shares in issue, excluding treasury shares.
The RM2.55 offer price represents a 41.67% premium over Tong Herr’s closing price of RM1.80 on Aug 5, the last full trading day before the company received the privatisation proposal.
It also represents premiums ranging from 52.55% to 75.79% over the company’s five-day to one-year volume-weighted average prices.
The proposed privatisation comes amid low trading liquidity in Tong Herr shares, with the company reporting an average daily trading volume of about 21,075 shares over the three years up to Aug 5, equivalent to only about 0.05% of its free float.
Tong Herr said the proposed SCR would provide entitled shareholders an opportunity to immediately exit and realise their investments, while the major shareholders would gain greater flexibility in managing and developing the group’s businesses as a private company.
The joint offerors and joint ultimate offerors do not intend to maintain Tong Herr’s listing on Bursa Malaysia’s Main Market following completion of the SCR and will request the company to apply for de-listing.
The exercise is expected to be funded through the group’s internally generated funds and/or bank borrowings. The company and the joint offerors have confirmed that the SCR will not fail due to insufficient financial capability and that entitled shareholders will be paid in full in cash.
The proposed SCR is subject to approval by the non-interested shareholders at an EGM, a High Court order confirming the capital reduction, and other required approvals and consents.
Barring unforeseen circumstances, the exercise is expected to be completed in the first quarter of 2027.