Where Next for F&N? Part II


In July, we covered Fraser and Neave (SGX: F99) (F&N)’s  plans to undertake a capital reduction exercise. The exercise had already taken place and cash distributions were paid out on 31st July 2013. On 27 August, F&N had come up with further plans to unlock shareholders’ value.

F&N has made a proposal to list its property arm, Frasers Centrepoint Limited (FCL), by undertaking a dividend in-specie distribution (dividends not paid out through cash but in the form of assets) of FCL shares to F&N shareholders. F&N will distribute two FCL shares for every one F&N share held.

FCL is expected to be listed on the SGX by way of introduction, which means that there will be no initial public offer. The listing of FCL shares is expected to be in November or December this year. After listing, F&N will no longer have an interest in FCL and FCL would have its own independent board and management team. FCL will hold all property-related businesses while F&N will hold the remaining F&B and publishing businesses.

The proposed transaction is subjected to approval by F&N shareholders at an Extraordinary General Meeting that is expected to be convened in November. TCC Assets Limited, owned by Thai tycoon Charoen Sirivadhanabhakdi who is also the Chairman of Thai Beverage (SGX: Y92), has already given its stamp of approval to back the plan. TCC Assets controls 61.7% of F&N, while 28.6% is controlled by Thai Beverage. The rest of the 9.7% are held in public hands.

Under the SGX rules, F&N’s public float will need to be raised to 12% or more before the listing of FCL. F&N has asked for an extension to raise the free float. Without the extension, it should have raised its free float before 19th July 2013.

Following the in-specie distribution exercise, the company is also looking into listing a hospitality real estate investment trust (Reit) to further enhance shareholder value.

Mr Lim Ee Seng, Group Chief Executive Officer of FCL was upbeat about the plan when he said, “This is another milestone in FCL’s corporate history. The listing will enhance FCL’s profile, and enable us to pursue our growth strategies independently. Our priority is to continue creating value for shareholders through optimising capital productivity, seeking sustainable earnings growth and expanding the asset portfolio in a balanced manner to preserve stability of earnings.”

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.