My post on LinkedIn can be seen here.
The new exit offer announced by OCBC for Great Eastern has drawn mixed reactions from commentators and shareholders of Great Eastern.
The new exit offer will be decided by minority shareholders of Great Eastern, as OCBC will not be able to vote on the relevant resolutions.
If the new exit offer is voted down by minority shareholders, Great Eastern will seek shareholders’ approval to adopt a new Constitution and to approve a proposed bonus issue comprising ordinary shares with voting rights and/or a new class of preference shares (Class C Shares) with no voting rights (the Bonus Issue Package).
Unlike the new exit offer resolutions, OCBC will be able to vote on the Bonus Issue Package. These resolutions are expected to be carried, as OCBC holds more than 93% of the existing voting rights of Great Eastern.
The independent financial adviser (the IFA) appointed by Great Eastern has opined that the new exit offer is fair and reasonable.
It should be noted that holders of Class C Shares can convert them into ordinary shares with voting rights after five years.
OCBC has announced that its long-term strategy is to take Great Eastern private.
Taken together, it seems that even if the trading suspension is lifted, it would likely be only a temporary stop-gap measure. OCBC will have enhanced voting rights in any subsequent exit offer if it converts all its Class C Shares to ordinary shares.
In this respect, the IFA should be asked to opine on whether the Bonus Issue Package is fair and reasonable, and not prejudicial to minority interests, as it is being presented to shareholders of Great Eastern in the context of the new exit offer.
I thank Ms. Tan Nai Lun of The Business Times, Singapore, for publishing my views in the attached article.
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