Tue, Sep 11, 2018 - Page 12 News List

LCY plans return within five years

JOINT VENTURE:KKR & Co would relist LCY shares on the local bourse after implementing its transition plans and as it expands into new fields, Hung Tsai-hsing said

By Ted Chen  /  Staff reporter

LCY Chemical Corp (李長榮化工) yesterday said that it would return to the local equity market within five years after it gained shareholders’ approval to proceed with a takeover by a consortium of investors led by KKR & Co.

More than 80 percent of shareholders approved plans to delist the firm from the Taiwan Stock Exchange (TWSE) and carry out a stock swap with an investment holding company that would carry out LCY’s takeover.

KKR plans to relist LCY shares on the local bourse in five years’ time after it implements transition plans, and expands into electronic-grade chemicals and expanded polypropylene foam, LCY chairman Hung Tsai-hsing (洪再興) told an extraordinary general meeting in Taipei yesterday.

Hung said that the company has no plans to apply for listing on the Shanghai Stock Exchange.

The company has been severely affected by its implication in a series of gas explosions in Kaohsiung in 2014, prompting the management team to seek help from foreign investors to provide shareholders a chance to unload their holdings at a premium.

LCY also announced that its buyout price has been adjusted from NT$56 per share to NT$53.1 to account for a cash dividend of NT$2.9 per share to shareholders in a NT$45.4 billion (US$1.47 billion) deal.

The takeover is to be carried out by a joint venture set up by Carlton (Luxembourg) Holdings SARL, an associate and a member of a consortium led by KKR.

Regarding some shareholders’ questions about the terms of the takeover, the company reiterated that the NT$56 buyout price is higher than the stock’s closing price over the past five years, prior to the gas explosions.

Shareholders who disagree with the buyout share price have the right to contest the matter in court, Hung said.

Former LCY chairman Bowei Lee (李謀偉) and other members of the Lee family who founded the company are to control a 45 percent stake in the joint venture, with KKR holding the remaining 55 percent.

Lee, 63, said in an open letter that he and the Lee family have taken on significant bank loans to fund the buyout arrangement.

Lee, who faces a four-year prison sentence over charges stemming from the explosions, said that he has begun planning for retirement and to distance the company’s owners from management.

The windfall from the takeover would be used to offset a portion of investment losses and to repay debts from the company’s loss-making foray into green energy, he said.

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