REE accepts Singaporean firm's bid
Refrigeration Electrical Engineering Corporation (REE) has accepted Platinum Victory Pte Ltd’s bid to buy 31.3 million REE shares.
The bid came on August 14 as the Singaporean firm offered to buy 31.3 million REE shares to raise its stake in REE by 10.11 per cent to 35.01 per cent.
Platinum Victory Pte Ltd planned to buy REE shares at VND45,000 (US$1.93) per share, 22.6 per cent higher than REE shares at the end of Thursday's trading at VND36,700 per share.
The transaction will be carried out within 30 days from the day the offer was made.
If the deal is pulled off, Platinum Victory will own 108.6 million shares of REE. The deal will cost the Singaporean business about VND1.4 trillion ($60.2 million).
The deal guarantees the foreign investor and other major shareholders will make further investment in human resources, physical and financial assistance, and corporate governance to help REE develop in a sustainable, stable way and meet the demands of all shareholders, REE’s board of directors said in a statement.
The publication of the bid proves the transparency of information disclosure is assured and all shareholders can learn the information of the deal when any individual or institutional investor wants to raise their stake above 25 per cent of the firm’s capital, REE said.
Foreign ownership has reached the limit of 49 per cent in REE’s capital. Therefore, Platinum Victory will have to buy shares from other foreign shareholders, REE added.
The bid was approved by three of the five members in REE’s board of directors. The two members that did not vote are “related to Platinum Victory Pte Ltd,” REE said.
In the second quarter, REE’s revenue was VND1.26 trillion, up slightly from last year’s figure of VND1.22 trillion.
The company's net profit fell 20 per cent year on year to VND458 billion in the second quarter as financial revenue dropped to VND65 billion from last year’s VND171 billion and borrowing interest rose sharply.
After six months, REE earned VND2.34 trillion in combined revenue and VND828.5 billion in combined profit. The figures were up 3 per cent and down 16 per cent year on year.
The company’s six-month earnings figures accounted for 42 per cent and 56.5 per cent of its full-year targets.
According to Viet Capital Securities Corp (VCSC), REE’s decline of first-half net profit came as strong office leasing earnings growth and recovery of the mechanical and engineering (M&E) segment failed to compensate for the power business’ earnings decline due to “lower rainfall and hydropower, no provision write-back for the Quang Ninh Thermal Power JSC (UPCoM: QTP) and weak results of the Pha Lai Thermal Power JSC (HoSE: PPC)”.
First-half revenue and net profit are in line with expectations as “hydropower earnings were weak in the peak season in the second half (of the year) versus the first half while the M&E and real estate segments have a nature of revenue and profit booking towards the year-end,” VCSC said in a report on REE’s six-month performance.
“We see minimal downside risk for (REE’s) 2019 earnings forecast (mainly due to PPC’s lower-than-expected Q2 2019 results)” but also “foresee upside risk to our projection for coming new investments,” VCSC added.