GL shares soar to 10-month high after proposed privatisation of firm

Singapore

SHARES of mainboard-listed GL Limited hit a 10-month high on Friday, following news of a proposed privatisation. This came after the hotel operator lifted its trading halt during the midday break.

The UK hotel operator's counter hit an intra-day high of S$0.71 as at 1.10pm on Friday, Singapore time, up 26.8 per cent or S$0.15.

The last time the counter closed near this level was on March 11, 2020.

GL shares closed 25 per cent or S$0.14 higher at S$0.70 on Friday - matching Guoco Group's offer price. About 7.2 million shares changed hands.

The proposed privatisation will provide greater management flexibility to help GL "navigate challenging and unprecedented operating environment" driven by Covid-19, Brexit and low oil and gas prices, it said in a bourse filing on Friday.

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GL said its core business of owning and operating hotels in the United Kingdom has been severely impacted by pandemic-driven restrictions, resulting in most of the company's hotels being closed during the six-month financial period ended Dec 31, 2020.

On Wednesday, the company posted a net loss of US$19.8 million for the six months to Dec 31, 2020, against a profit of US$26.9 million in the year-ago period.

The proposed offer price of S$0.70 per share represents a 25 per cent premium over GL's last trading price of S$0.56 on Thursday, the last trading day before the announcement.

It also represents a premium of 28.2 per cent, 33.3 per cent, 28 per cent and 9.5 per cent over the one-month, three-month, six-month and 12-month volume-weighted average prices up to and including the last trading day.

The implied price-to-net asset value multiple of 0.73 times represents a 19.7 per cent premium to the one-year historical average of 0.61 times, mainboard-listed GL added.

Lim & Tan Securities is maintaining its "hold" call on the stock.

While prospects are tough, the research team believes GL's financial position and banking facilities will be enough to tide them over this difficult period, said a research note.

"Its current depressed share price and valuations have also partially factored in the dire hospitality situation in the UK with renewed Covid-19 infections and lock-downs," Lim & Tan Securities noted.

The offeror for the proposed privatisation is GuocoLeisure Holdings, a wholly-owned special purpose vehicle of Hong Kong-listed Guoco Group.

Guoco Group, through wholly-owned subsidiary GuocoLeisure Assets, has a 70.84 per cent interest in GL's shares.

GuocoLeisure Assets has irrevocably undertaken to accept the offer and waive its right to receive the cash consideration payable for its stake.

The proposed offer is thus the only one capable of turning unconditional or succeeding, GL said. It is conditional upon GuocoLeisure Holdings receiving acceptances of no less than 90 per cent of the shares.

GL noted that the proposed offer is an opportunity for shareholders who may otherwise find it difficult to exit their investment in GL due to low trading liquidity.

DBS is the sole financial adviser to GuocoLeisure Holdings.