CH Offshore

CH Offshore: Amidst Falcon Energy's voluntary conditional offer for shares of CH Offshore (CHO), second largest shareholder, Chuan Hup, raised its shareholdings from 23.8% to 24.7% via open market purchases (6.4m shares) at an average price of $0.5035. Recall, since Falcon's offer of $0.495/share on 11 Dec, CHO have been trading firmly above the offer price between $0.50-$0.525/share, pointing towards a slim chance that CHO's shareholders will accept the offer. The open rejection by Chuan Hup now forces Falcon to either raise its offer price, or step away from the offer and keep its stake at 29.1%. To put events in perspective, Chuan Hup sold a 29% stake in CHO to Malaysian-based Scomi Group in 2005. Subsequently, Falcon acquired the shares from Scomi at $0.70 each in 2010. The offer price of $0.495 values CHO at 1.08x FY14 P/B. Ascribing a 7-year historical average P/B of 1.25x would put its share price at $0.57. The closing date of the offer is 26 Jan.