Citic Envirotech shares surge on news of privatisation bid

Singapore

SHARES of Citic Envirotech surged as high as 45.9 per cent after resuming trade on Thursday on news that its majority owner is planning to take it private.

The counter peaked at $0.54, before closing on Thursday at $0.535, 44.6 per cent or 16.5 Singapore cents higher.

The jump in share prices began shortly after the market opened, with shares surging to S$0.535 as at 9.03am, from a last closing price of S$0.37 prior to a trading halt called on Nov 4.

After announcing the pre-conditional exit offer on Wednesday evening, the mainboard-listed environmental engineering services company called for the trade halt to be lifted.

The offer of S$0.55 in cash for each share was made by Citic Group Corp's Citic Environment Investment Group. This price marks a premium of about 68.5 per cent over the three-month volume-weighted average and values the company at S$1.34 billion. The offer vehicle is CKM (Cayman) Company.

The offeror said it does not plan to roll out major changes to Citic Envirotech's business, but it believes that the company "is unlikely to require access to Singapore capital markets to finance its operations in the foreseeable future".

Owners and management of the company would also have more control and flexibility over the company, along with savings on compliance costs with a delisting, it added.

The offeror, in concert with shareholders Lin Yucheng and Pan Shuhong, already has a deemed interest of 79.1 per cent in the company. However, the delisting must also clear a majority with shareholders who own at least 75 per cent of all shares, while the concert group must abstain.

The exit offer is subject to the approval of various Chinese authorities, and also needs shareholder approval at an extraordinary general meeting expected in the week of Dec 30.

Citic Envirotech is an environmental solutions provider specialising in water and wastewater treatment, water supply and recycling. It is also in the business of sludge and hazardous waste treatment, along with river restoration.