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Cityneon could face cash offer as majority shareholder gets new majority owner

Singapore

MAINBOARD-LISTED events and exhibitions firm Cityneon Holdings may face a possible cash offer as its majority shareholder Lucrum 1 Investment Limited, which holds a nearly 70 per cent stake in Cityneon, changes ownership.

Even if that occurs, however, the firm's management and future plans should not be affected, Cityneon executive chairman and chief executive Ron Tan, who is also a Lucrum 1 shareholder, told The Business Times.

Mutual Power - an indirect wholly owned subsidiary of Hong Kong-listed Teamway International Group Holdings - had on Monday signed a memorandum of understanding (MOU) to acquire a 76 per cent stake in Lucrum 1 from Massive Right Investment Limited.

Mutual Power already owns an 8.5 per cent stake in Lucrum 1. If the acquisition materialises, the total 84.5 per cent stake of Lucrum 1 will give it statutory control of the firm, thus triggering the chain offer principle in the Singapore code on takeover and mergers.

It will therefore be required to make a mandatory unconditional cash offer to acquire all the issued and paid-up ordinary shares in Cityneon.

The Teamway board emphasised that the MOU is non-legally binding, and that no legally binding agreement for the proposed acquisition of Lucrum 1 has been entered into as at Tuesday. Mutual's acquisition of Lucrum 1 is also subject to the usual precedent conditions such as obtaining necessary approvals.

Lucrum 1 currently holds a 68.95 per cent stake in Cityneon. It made a mandatory unconditional cash offer for Cityneon's ordinary shares in July, after buying over a 52.51 per cent stake from Laviani Pte Ltd - a wholly owned subsidiary of Malaysia's Star Media - in May for S$0.90 a piece.

Before that deal with Laviani, Mutual Power had agreed to subscribe for 8.5 per cent of Lucrum 1. As at May 13, Lucrum 1's shareholders were Massive Right Investments Limited (76 per cent); Philadelphia Investments Ltd (15.5 per cent), a special purpose vehicle held solely by Mr Tan; and Mutual Power (8.5 per cent).

In response to BT queries, Mr Tan said via e-mail that he believes "there must be positive reasons" for Mutual Power's interest in raising its existing stakes in Lucrum 1 and Cityneon.

"If the mandatory unconditional cash offer does happen, I do not foresee changes to the future management as well as plans and directions of the company," he added.

Teamway International, which was known as Jin Bao Bao Holdings until late September this year, provides packaging products and structural components in China, according to its website.

Cityneon's net profit rose 62 per cent to S$7.7 million in the first half of this year thanks to higher gross profit margins generated from the intellectual property rights business.

Revenue for the six months ended June 30 increased 7 per cent to S$49.7 million.

The group in end-August acquired JP Exhibitions LLC for US$25 million, which allows it to exploit the intellectual property (IP) rights with the Jurassic World exhibition. It also holds the IP rights licences for Disney's Marvel Avengers Station, and Hasbro's Transformers Autobot Alliance.

Shares in Cityneon closed at S$1.145 on Tuesday, down 1.5 cents.