Challenger Technologies to delist with $0.56 exit offer price

It cited weak retail sentiment and industry disruption amongst its reasons for delisting.

Information technology (IT) retailer Challenger Technologies is seeking to delist from the official list of the Singapore Exchange Securities Trading (SGX-ST), with IT services firm Digileap Capital making a cash exit offer for all the issued and paid-up ordinary shares of Challenger at an exit offer price of $0.56 apiece, an announcement revealed.

Amongst the reasons for the proposed delisting, the firm said that Challenger “has not carried out any exercise to raise cash funding on the SGX-ST since 2007, and is unlikely to require access to Singapore capital markets to finance its operations in the foreseeable future.” It further noted that the delising would eliminate the costs of compliance with the listing rules and regulations, thereby allowing Challenger to focus its resources on its business operations.

“The Company is facing challenges due to weak retail sentiment and industry disruption. To navigate this challenging environment, changes to the business may need to be implemented and dividends could be affected during such time,” they noted.

Also read: Cityneon to delist after accepting buyout offer

Due to the low trading liquidity of the Shares, the exit offer will provide an exit option for shareholders of Challenger who wish to realise their investment in Challenger at a premium over the historical transacted prices without incurring brokerage and other trading costs. Average daily trading volume amounted to approximately 38,501 shares over the 12-month period immediately preceding the last full market day.

The exit offer price reportedly represents a premium of approximately 15.1% over the volume weighted average price (VWAP) of $0.487 for the 12-month period up to and including the last full market day. It also represents a premium of approximately 110.1% to the net tangible asset value of Challenger as at 31 December 2018, the firm noted.

The delisting and the exit Offer will be conditional upon the SGX-ST agreeing to an application by Challenger to delist and the resolution being passed at an extraordinary general meeting.

“Should the delisting resolution be passed, Challenger will be delisted from the SGX-ST irrespective of the number of acceptances received by the offeror in respect of the exit offer,” Challenger Technologies noted in a filing on the local bourse.

Digileap Capital is reportedly a partnership between the Loo Family and Dymon Asia Private Equity, via Dymon Asia Private Equity (S.E. Asia) Fund II. According to the announcement, four members of the Loo family, including Challenger’s CEO Loo Leong Thye and Ng Leong Hai, who hold approximately 78.64% of the total number of issued shares, have provided undertakings to vote in favour of the delisting resolution and exit offer. 

Photo from Challenger Technologies.