Securities Investors Association flags minority shareholders on energy firm

The SIAS told minority shareholders to deny second offer for Golden Energy and Resources.

It can be recalled that investment firm SIAS published an appeal to GEAR on its exit offer on 1 March 2023. 

SIAS told the firm to improve its exit offer as GEAR seeks to carry out a distribution of GEMS and the privatisation of GEAR.

SIAS also followed up this call back in March but the independent financial advisor (IFA) “has allegedly conflated the two corporate actions despite SIAS’ highlighting this specific concern at the meeting with GEAR.” 

To this, SIAS has questioned the IFA’s estimate of the range of values of GEAR.

“To set the lower bound in the IFA’s estimate of the range of values of GEAR, the IFA then introduced a new valuation metric – Enterprise value to trailing twelve-month (TTM) EBITDA,” it said.

“SIAS questions this approach as companies are too different to be generalised this way, especially one that is going private (and there being no chance for further price discovery in the future). In addition, the IFA applied its discretion and pre-selected three out of eight Indonesian comparable companies,” it added.

It then called on the minority shareholders to reject the second offer, which is an exit offer for GEAR (excluding GEMS).

“The SOTP for the remaining of GEAR (without GEMS) is valued by the IFA at $0.567 with Stanmore contributing 90% of the value before accounting for debt at the company’s level,” read the SIAS letter.

GEAR’s response

In a bourse filing, GEAR’s board of directors said called on its shareholders to see  paragraphs 9 and 10 of the SGX-ST's letter of 24 February 2023 to the Board providing the guidance that:

(i) the “GEMS Share Consideration and Cash” and the “All Cash Consideration” will be treated as the exit offer for the purpose of Rule 1309 of the SGX-ST Listing Manual; and

(ii) the Company is to ensure that the IFA's opinion states, inter alia, whether the terms of the Proposed Distribution and the Conditional Exit Offer (when taken together as a singletransaction) are fair and reasonable (emphasis added). 

With this, GEAR said the claim that the IFA “conflated the two corporate actions are a mischaracterisation as the IFA has sought to address the directions referred to above.”