Keppel starts arbitration proceedings against SPH over dispute linked to acquisition bid
A Keppel Corp unit has started arbitration proceedings against Singapore Press Holdings (SPH) over a dispute stemming from a hard-fought battle for the company, which has shed its media business.
SPH had told the unit - Keppel Pegasus - that it intended to consult the Securities Industry Council (SIC) about terminating an agreement struck between the two firms on Aug 2 last year related to the acquisition bid, which values SPH at $3.8 billion.
Keppel Corp said in a Singapore Exchange filing on Wednesday (Feb 9) that it "does not agree with SPH's attempted purported termination of the Keppel implementation agreement".
This agreement sets out the terms and conditions for how Keppel's proposed bid for SPH will be implemented.
In a separate filing on Wednesday night, SPH said the Keppel scheme's cut-off date of Feb 2 has "come and passed, and not all of the scheme conditions set out... in the Keppel implementation agreement have been satisfied, nor has the Keppel scheme become effective in accordance with its terms".
It noted that the SIC - the regulator for takeovers and mergers - has ruled that it has no objections to SPH exercising the termination right.
"The company will vigorously defend its position in the appropriate forum," said SPH.
The events are the latest development in a keen battle for SPH by Keppel and Cuscaden Peak, a consortium comprising Hotel Properties, businessman Ong Beng Seng and two Temasek-linked entities - CLA and Mapletree.
Keppel announced its proposed acquisition of SPH on Aug 2, but Cuscaden made a surprise rival bid on Oct 29.
Keppel improved its terms on Nov 9 with its final offer of $2.351, comprising 86.8 cents per SPH share plus 0.596 of a Keppel Reit unit and 0.782 of an SPH Reit unit.
Cuscaden made a revised offer, also in November. This came with two options: $2.40 a share for SPH, comprising $1.602 cash and 0.782 of an SPH Reit unit through a distribution-in-specie by SPH; or an all-cash deal of $2.36 a share.
SPH said in its filing on Wednesday that the implied value of the Cuscaden scheme consideration has remained superior to that of the Keppel scheme consideration.
It noted that, as at Feb 9, the implied valuation of the Cuscaden scheme consideration is $2.36 for the all-cash deal and $2.361 for the combination of cash and SPH Reit units.
In contrast, the implied valuation of the Keppel scheme consideration is $2.318, which is below SPH's last trading price of $2.33 per share.
"Due to there being two parallel competing schemes, the company, together with Keppel Pegasus and Cuscaden, have been engaged in substantial discussions among themselves and the regulators," said SPH.
It noted, however, that there has been no consensus on which scheme would be submitted to court for approval in the event that both schemes achieve majority votes.
The termination of the Keppel scheme will allow shareholders to vote at the Cuscaden scheme meeting "as soon as practicable", said SPH.
It added: "The company will continue with its preparations to allow shareholders to consider and vote on the Cuscaden scheme."
"Shareholders will have to await the decision of the arbitrator on whether the Keppel offer is on or not," said Securities Investors Association Singapore president David Gerald.
Keppel Corp said that Keppel Pegasus filed a notice of arbitration on Feb 9 with the Singapore International Arbitration Centre (SIAC) to commence proceedings against SPH and to seek various reliefs, including that SPH meet specific obligations.
Keppel said this was in accordance with the terms of the Keppel implementation agreement, which provides for disputes to be resolved by the SIAC.
"The company does not expect the arbitration to have a material adverse effect on its operations and the financial performance of the Group," Keppel added.