Update: The privatisation was subsequently confirmed after market close yesterday. Simon Cheong will be offering SGD1.80 a share in cash for the rest of SC Global that he does not own. Mr Cheong and concerted parties own about 55% of SC Global. Now the ball is in the court of Wheelock, which has a 15.6% stake. Its cost is SGD1.00 per SC Global share. Our RNAV for SC Global ranges from SGD3.82-4.00.

The stock of high-end property developer SC Global has been halted for three days now since Monday, which is very unusual. Usually, the SGX will allow a maximum of three days but will consider an extension if requested by the company.

There is some market chatter that Simon Cheong, the major shareholder and Chairman and CEO of SC Global, may privatise his company to avoid paying the penalty for not selling off all the units in its projects within two years after they receive TOP. The first forfeit 10% involves the security deposit paid for the land, and subsequently, it will have to pay a penalty of 8% of the land cost pro-rated for the proportion of unsold units in the first year. This penalty escalates to 16% in the second year and reaches 24% in the third and subsequent years. By our estimates, SC Global will lose SGD71.7m in 2013 for the following three projects if they do not receive a waiver or extension from the government.

Source: Maybank Kim Eng Research - 06 Dec 2012