Vard Holdings' parent company offers to privatise it again

It wants to buy Vard's remaining shares for 25 cents each.

Vard Holdings' (Vard) parent company Fincantieri Oil & Gas S.p.A (Fincantieri) offered to privatise the firm by buying its remaining shares for 25 cents each.

According to DBS Equity Research, Vard's board of directors has considered the delisting proposal and resolved to apply for a delisting approval to the Singapore Exchange (SGX).

The board also resolved to hold an extraordinary general meeting (EGM) to seek shareholder approval.

The delisting will only occur if the SGX agrees to Vard's application and at least 75% of shareholders approve or not 10% or more vote against the delisting.

DBS said Fincantieri hold 79.34% of Vard. If Fincantieri crosses the 90% ownership threshold during the exit offer, it can compulsorily acquire all the remaining shares. Otherwise, it may not own all the outstanding shares even after the firm is successfully delisted.

Fincantieri previously tried to privatise Vard for 24 cents per share. However, compulsory acquisition threshold was not breached and hence delisting was not triggered then.

Here's more from DBS Equity Research:

While the offer price looks fair to us, given it is almost the same as our target price for Vard, it remains to be seen whether those shareholders who did not tender in the earlier round will agree to the delisting and Exit Offer this time around, given the pricing is about the same.

However, it must be noted that Vard’s share price has not moved significantly since the close of the last offer, despite improvement in oil price, as its earnings are still in the red, and outlook for order wins is not that rosy either.

The shares have been quite illiquid as well, with only 175,437 shares on average being traded on days with trading activity over the last six months, representing just 0.07% of the total free float.

Thus, this might create an incentive for shareholders to accept the offer this time. Dormant shareholders may increase the chances of the delisting resolution being successfully carried out at the EGM, whereupon dissenting shareholders may not want to hold on to shares in a private company.