ALLIANCE Energy Services is proposing to take engineering company PEC private by way of a scheme of arrangement for S$0.64 per share in cash and S$0.20 per share through a special cash dividend.
Both companies have agreed to the offeror acquiring all issued and paid-up ordinary shares in PEC’s share capital from all its shareholders, excluding the shares PEC holds in treasury, they said in a joint statement on Monday (Feb 17).
As at the date of the joint announcement, Alliance Energy Services does not hold any direct or indirect interest in PEC shares, while PEC has an issued and paid-up share capital of approximately S$58.8 million, comprising roughly 255.7 million shares, of which 791,886 are held as treasury shares.
The offeror has also obtained irrevocable undertakings from a group of PEC shareholders to vote in favour of the scheme and the special dividend, and to sell their combined stake of approximately 63.4 per cent to the offeror. The PEC shareholders group includes executive chairman Edna Ko and its chief executive Robert Dompeling.
Once the scheme takes effect, PEC will be delisted from the mainboard of the Singapore Exchange Securities Trading subject to the exchange’s approval, Alliance Energy Services and PEC said.
The offeror, Alliance Energy Services, is part of a group of entities managed under the Liberty Group, which provides energy engineering solutions and chemical decontamination for oil and gas refineries and petrochemical facilities.
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The scheme consideration
The scheme consideration, which amounts to S$0.84, represents a 12.8 per cent premium over the counter’s last transacted price of S$0.745 on its last undisturbed trading day on Nov 26, 2024. The company disclosed the following day that it had been approached by a third party about a potential share deal.
The scheme also represents a premium of approximately 23.5 per cent, 28.6 per cent, 30.6 per cent and 33.3 per cent over the volume weighted average price per share for the one-, three-, six- and 12-month periods, respectively, up to and including its last undisturbed day.
The acquisition presents shareholders with a “compelling opportunity … to unlock value and realise their investment in the shares at an attractive premium over historical market prices”, the companies said.
PEC has historically experienced low trading liquidity, they added. Its average daily trading volumes for the one-, three-, six- and 12-month periods prior to and on its last undisturbed day each came up to less than 0.12 per cent of its total shares.
After accounting for total dividends distributed over the past five-year period up to and on its last undisturbed day, the scheme consideration implies a total return of 64.1 per cent and an annualised total return of 10.4 per cent per annum for an eligible shareholder who had acquired shares five years prior to that date, they said.
The scheme thus gives shareholders the opportunity to realise their investment “at a premium over the prevailing market prices”, the companies said – an option that would not otherwise be available to them given the low liquidity of the shares.
Moreover, the scheme is a “secure exit strategy” that allows shareholders to realise their investments without incurring brokerage and other associated trading costs, they added.
Given that PEC has not conducted any exercises to raise funds from equity capital markets since its initial public offering in 2009, they added that the company is unlikely to tap equity capital markets in the foreseeable future.
“Therefore, the listing status of (PEC) brings fewer benefits to the company and its shareholders than initially envisaged,” they said.
Shares of PEC closed flat at S$0.83 on Monday before the announcement.
