KUALA LUMPUR (Sept 7): Stainless steel and aluminium products manufacturer Tong Herr Resources Bhd (KL:TONGHER) said on Monday that it would table a proposal from its major shareholders to take the company private via a selective capital reduction and repayment exercise (SCR) at RM2.55 per share.
In its bourse filing, the group said the SCR proposal would be tabled at an extraordinary general meeting following advice from independent adviser Mercury Securities Sdn Bhd.
The decision follows an agreement by the joint offerors, Allrich Corp and Richard Holdings Ltd, to extend the deadline for the company's response from Sept 4 to Oct 4.
The offerors had proposed the privatisation on Aug 6, citing reduced listing costs, faster decision-making and allow shareholders to exit their investments amid the stock’s low trading liquidity. Tong Herr's stock had an average daily trading volume of 21,075 shares for the past three years up to the last trading day.
Under the SCR proposal, the holders of 39.14 million shares (representing a 25.50% equity stake) will receive RM2.55 per share, amounting to a total payout of RM99.81 million. All shares held by entitled shareholders as well as 3.91 million treasury shares will subsequently be cancelled.
The offer price of RM2.55 is a 41.67% premium over the stock's closing price of RM1.80 on Aug 5, before the proposal was announced. It is also a 52.55% to 75.79% premium over its five-day to one-year volume-weighted average market prices.
The proposed SCR will be funded through internally generated funds and bank borrowings and is expected to be completed in the first quarter of 2027.
RHB Investment Bank Bhd is the principal adviser to Tong Herr for the exercise.
Tong Herr was founded by the Tong Group in 1989. It manufactures stainless steel fasteners used in machinery, food processing, telecommunications and construction for markets across Asia, Europe, Africa, Oceania and the Americas.
It was listed on the main market of Bursa Malaysia in 1999.
Tong Herr closed unchanged at RM2.38 on Monday, with only 6,500 shares changing hands. The closing price values the group at RM374.7 million.
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