Sino-Thai Engineering and Construction Public Company Limited (SET: STEC) has published an opinion of a financial advisor on its restructuring plan that includes listing a new holding company and delisting itself from the Stock Exchange of Thailand.
STEC plans to restructure its shareholding structure by establishing Stecon Group Public Company Limited (the Holding Company) as the parent holding company of STEC. The Holding Company will act as the strategic and policy arm of the business group as it will provide framework and guidelines for future investment, make investment decisions, and provide support services to companies within the group.
The Holding Company files the formal tender offer to acquire all of the shares of STEC from the existing shareholders of STEC by issuing newly-issued ordinary shares in exchange for STEC’s ordinary shares, at a share swap ratio of 1 ordinary share of the Holding Company per 1 ordinary share of STEC to delist STEC from SET, and the Holding Company will be listed on SET, simultaneously.
If the number of shares intended for sale to the Holding Company within the tender period is less than 75 percent of the total voting rights of STEC, the Holding Company will cancel its offer to purchase the securities of STEC and will not proceed with the Restructuring Plan.
STEC expects to proceed with the transfer of subsidiaries, associates, as well as investments in other companies, to the Holding Company and/or the Holding Company’s subsidiaries, including executing any other actions in accordance with STEC’s Restructuring Plan within August – September 2024.
STEC expects to effectively manage the risks of each business segment from the restructuring plan. Meanwhile, it can enhance efficiency, flexibility, and reduce complexity in business management, along with the ability to attract professionals.
The restructuring plan will create opportunities to expand investments into other businesses to generate recurring income, reducing the revenue volatility in construction contracting businesses as well as create opportunities to attract business partners to support future business expansion.
The transaction of Transfer of Subsidiaries and Associated Companies’ Shares and Investments in Other Companies Held by STEC to the Holding Company is at 9,317 million baht.
Following the restructuring plan by the Board of Directors of STEC, the IFA opine that the shareholders of STEC shall vote to agree with the restructuring shareholding and management plan, the delisting of STEC, and the transfer of shares of subsidiary companies, associated companies, and investments in other companies held by STEC to the Holding Company.
The tender offer and the swap ratio are appropriate, and the shareholders of STEC shall accept the tender offer, as well as vote for the transfer of shares of subsidiary companies, associated companies, and investments in other companies for the restructuring of shareholding and management as mentioned above.
In the case that the shareholders of STEC reject the tender offer, the shareholders may be affected from the delisting of the securities of STEC.
As for the transaction size, the IFA also deems reasonable because the ultimate transaction value will be based on the cost of acquiring shares in each company from the most recent audited financial statements that have been publicly disclosed or management accounts on or near the share transfer date. The decision to use the cost approach as the valuation method is appropriate as the purpose of the transfer is to group STEC’s businesses in alignment with the restructuring plan plan.
In consideration of the principles, reasons, and overall benefits arising from the restructuring plan, IFA has evaluated and concluded that the shareholders should pass a resolution to approve the Transfer of Subsidiaries and Associated Companies’ Shares and Investments in Other Companies Held by STEC to the Holding Company.
