Chinese government-backed Bowenvale has launched a HK$2.6bn (US$335m) buyout offer for the 26% it does not already own in AsiaSat, the Hong Kong-based satellite operator.
The mandatory offer was issued after private equity firm Carlyle bought General…
Chinese government-backed Bowenvale has launched a HK$2.6bn (US$335m) buyout offer for the 26% it does not already own in AsiaSat, the Hong Kong-based satellite operator.
The mandatory offer was issued after private equity firm Carlyle bought General Electric’s 49.5% economic and 50% voting interest in Bowenvale, a JV shared with China’s Citic.
Carlyle paid US$483.3m in cash for GE’s stake and completed that deal on 12 May, prompting Bowenvale to make an offer for AsiaSat’s free float to comply with Hong Kong’s takeover code.
Goldman Sachs and BofA Merrill Lynch are offering HK$26 for each of the 100 million shares in free float on behalf of the companies – the same price Carlyle paid for Bowenvale’s shares. This is a 3.7% discount to their HK$27 closing price on the last trading day before Carlyle’s offer in December.
If more than 90% of the free float is purchased, Bowenvale has said it will exercise its compulsory acquisition rights to buy all the shares, and then take AsiaSat private by withdrawing it from Hong Kong’s stock exchange.
An offer document will be published on 19 May with schedule information about the offer.
AsiaSat has said it will pay a US$600m special interim cash dividend to fund Caryle’s Bowenvale stake acquisition, as well as the mandatory buyout offer.
This will partly be funded through cash reserves and a US$240m dividend loan facility already agreed between CTBC, Cathay United, Mega International Commercial Bank and ING.
Those banks are also providing US$296m in term loans to fund Carlyle’s share purchase, and up to US$200m of debt for the takeover offer.
Whether Bowenvale’s privatisation plan succeeds is a different matter. Investors have twice failed to buy out AsiaSat’s minority shareholders over the last eight years.
A plan by the operator’s management to buy shares in the free float at HK$22 each – later upped to HK$23.5 – fell apart in 2012, when its independent shareholders overwhelmingly voted against the move. The HK$23.5 price represented a 24% premium on the operator’s shares before that privatisation proposal was announced.
Before that, GE and Citic were forced to scrap a buyout bid in 2007 after the US Department of State blocked the deal.
Goldman Sachs is lead financial adviser and BofA Merrill Lynch is financial adviser for the group’s latest buyout attempt, while Anglo Chinese Corporate Finance is advising AsiaSat’s independent board committee.
