KUALA LUMPUR (Sept 13): Grand Central Enterprises Bhd's (KL:GCE) major shareholders failed in their bid to take the hotel operator private, after the proposal was rejected by minority shareholders at an extraordinary general meeting (EGM) on Friday.
Tan Chee Hoe & Sons Sdn Bhd and Hotel Grand Central Ltd — which together hold a 72.65% stake in GCE — had offered to buy the remaining shares in the company at 46 sen per share.
For the privatisation plan to succeed, there must be approval from a majority of shareholders or shareholders representing 75% of the total issued shares, and votes against the resolution could not exceed 10% of the total issued shares held by voters present at the meeting.
A total of 42 shareholders who attended the EGM on Friday, whose total shareholding accounted for 10.76% of the company's issued shares, voted against the proposal, according to GCE’s filing with the stock exchange.
Following the lapse of the offer, UOB Kay Hian, acting on behalf of Tan Chee Hoe & Sons and Hotel Grand Central Ltd, said that the offer is no longer valid, and that prior acceptances are void, with all transferred shares to be returned to their respective holders.
GCE, which operates hotels under the Grand Continental brand, has five hotels with an average building age of 31 years and recorded a low occupancy rate of 24% between January and May.
When the offer was first announced in July, executive director Tan Eng How and Hui Chiu Fung, representing Hotel Grand Central Ltd, said privatising GCE would provide better flexibility for managing the business without the need to comply with listing requirements.
Independent adviser Main Street Advisers had last month advised minority shareholders to accept the offer.
It deemed the 46 sen offer unfair, representing a discount of 50 sen (52.08%) to 71 sen (60.68%) below the estimated value per GCE share. However, it also noted that the offer was reasonable as it provided an exit opportunity for shareholders, especially those with large holdings, given GCE’s low trading liquidity, consistent losses over the past decade and lack of dividends since 2019.
GCE has posted losses for the past 10 consecutive years. For the second quarter ended June 30, 2024, it reported a net loss of RM17.8 million, with revenue declining 11.2% year-on-year to RM6.57 million.
Shares of Grand Central Enterprise remained unchanged at 46 sen on Monday, valuing the company at RM90.62 million.