Another attempt to delist Property Development, offer price up by 40%

Property Development PLC (PDL), the Bank of Ceylon (BOC) subsidiary owning its headquarters building in once again attempting to delist from the Colombo Stock Exchange offering its minority shareholders Rs. 183 per share – a substantial increase from the previous Rs. 130 price offered five years ago.

BOC is the predominant shareholder of PDL owning 95.55% of the company’s equity. This makes it ineligible to be quoted either on the main board or the Diri Savi Board of the CSE due to insufficient liquid float.

“BOC has for a long time been unwilling to reduce its holding by selling some of its shares. Without doing that increasing the liquid float is impossible. Of course there are many companies that continue to be listed without the required share liquidity, but the CSE has not enforced the liquidity rule though drawing attention to it time and again,” an analyst said.

The difference between such companies and PDL is that the latter summoned shareholders to an extraordinary general meeting in 2018 to adopt a delisting resolution and the resolution was outvoted by the minority on a ‘one man, one vote’ poll.

The minority was determined to push up the offered price per share which was not conceded by PDL – in effect BOC. In a February circular to shareholders, PDL’s Secretaries have said that BOC has informed the company that “it will not sell its shares under the delisting process and the repurchase offer need not therefore be made to BOC” to purchase its shares.

PDL last week again circularized shareholders that an Extraordinary General Meeting (EGM) has been summoned for Mar. 29 to consider the proposed delisting. This circular makes clear that PDL itself and not BOC will repurchase the shares of those willing to sell.

The EGM will be physically (and not remotely) held. PDL has invited shareholders to submit their proxies favouring the directors of the company in a move interpreted as an effort to forestall any outvoting as in 2018 should a poll be called.

A PDL spokesperson said they were holding a physical meeting to obviate any ex-post facto criticism. Several top accountancy firms have confirmed that the share price offer, nearly 40 percent above the previous one, was fair.

There are a total of 3,403 shareholders of the company of whom over 3,000 own up to 1,000 shares. There are very few substantial minority shareholders with the second largest (next to BOC) owning 0.23%.