PETALING JAYA: Leweko Resources Bhd shareholders have been advised to accept the unconditional mandatory takeover offer of 18 sen per offer share and one sen per offer warrant by Rengit Capital Sdn Bhd.
In its independent advice circular, independent adviser UOB Kay Hian Securities (M) Sdn Bhd (UOB Kay Hian) said that the offer is “not fair” but “reasonable” and recommends that shareholders accept the offer.
UOB Kay Hian said the offer is “not fair” as the daily market prices of Leweko shares are higher than the share offer price for 72.93% of the total market days over the past two years up to the LFTD.
As at the LPD, the share offer price represents a discount of 16.28% to the last transacted price of 21.5 sen per Leweko share and a discount of 13.38% to 17.92% over the five-day and one month VWAP of Leweko shares.
“Although the share offer price represents a premium over the historical VWAPs up to LFTD, we view that the market prices of Leweko shares since the LFTD would serve as a more meaningful reference for our evaluation on the fairness of the offer as these market prices would reflect the most recent market perception of the group, given the entry of a new shareholder and the offeror’s intention to maintain the listing status of Leweko,” it said.
The 18 sen per share offer price is also lower than the estimated fair value per Leweko share ranging from 23.5 sen to 24.4 sen, representing a discount of between 23.4% and 26.23%.
Assuming full exercise of the warrants into new Leweko shares, the share offer price is still lower than the diluted estimated fair value for the entire equity interest in Leweko shares ranging from 22.6 sen to 23.3 sen, representing a discount from 20.35% to 22.75%.
In addition, the warrant offer price of one sen per offer warrant is significantly lower than the closing prices of Leweko warrants since its listing on the Main Market of Bursa Malaysia in September 2015 up to the LFTD.
According to UOB Kay Hian, the warrant offer price represents a discount of 85.01% to 89.47% over the five-day, one-month, three-month, six-month and one year VWAP of the Leweko warrants up to the LFTD.
As at the LPD, the warrant offer price represents a discount of 84.62% to the last transacted price of 6.5 sen per Leweko warrant on July 22, 2019.
However, the offer is considered “reasonable” as it provides an exit opportunity to shareholders, especially those holding large blocks of offer securities, to realise their investment.
UOB Kay Hian said Leweko shares and warrants are relatively illiquid with an average monthly trading volume-to-free-float of the Leweko shares and warrants up to the LFTD of 0.94% and 2.5% respectively, which are lower than the average monthly trading liquidity of KLPRO index of 8.59%.
Hence, although Rengit Capital intends to maintain the listing status of the company, shareholders may have limited opportunities or may take longer to dispose their offer securities in the open market after the closing date.
Last month, Rengit Capital acquired a 50.47% stake and 93.58% warrants holding in Leweko for RM30.18 million, triggering an unconditional mandatory takeover offer for the rest of the shares and warrants in the company.
source https://www.thesundaily.my/business/shareholders-of-leweko-advised-to-accept-takeover-offer-AX1176741
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