STX OSV’s rise spurs stake sale expectation
Complete transfer of 50.75% parents’ stake likely: analyst
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Complete transfer of 50.75% parents’ stake likely: analyst
By LYNN KAN
12 January 2012
STX OSV’s stock price has started peeling away from the broader market in the past week, stoking expectations that its parent STX Europe might soon be selling its 50.75 per cent majority stake in the offshore vessel builder.
STX OSV has put on over 10 per cent since Jan 3, while the Straits Times Index has inched up just 1.3 per cent.
‘We think a complete transfer of the 50.75 per cent parents’ stake is likely,’ said AmFraser analyst Lee Yue Jer in a note yesterday.
He pointed to the need within STX Corporation, of which STX OSV is part, to pay off its debts.
‘Market talk indicates that STX Corp has retained the services of two investment banks on this matter,’ said Mr Lee.
STX Corporation’s chairman Kang Duk Soo said last October that he hopes to raise as much as 700 billion won (S$779.8 million) by selling foreign assets in the early part of this year.
Those plans may include STX OSV, although the shipbuilder previously declined to comment on the possible sale.
The recent bull run on STX OSV also mirrors what happened over two weeks in late June till early July. Then, it soared 18.3 per cent in the two weeks before STX Europe sold 18.3 per cent of the company to German investment fund OZ Management or Och-Ziff, at $1.33 a share.
Och-Ziff now has a 20 per cent share in the company.
The $1.33 placement price may act as a ‘floor price’ in the subsequent divestment, said DMG analyst Jason Saw.
He added that Och-Ziff has rights to participate in the 50.75 per cent stake sale.
There are no known buyers lined up for STX Europe’s holding.
But if it comes to pass, Mr Lee believes that the entire stake would be sold to one buyer.
‘Multiple large shareholders with more than 20 per cent each would be undesirable,’ he said. ‘It would raise the question of who is really in charge.’
There is also another possibility that STX Europe may sell less than 30 per cent - the level at which a mandatory takeover is triggered - meaning a 29 per cent and 21.75 per cent split between itself and a buyer.
‘But would that raise enough cash for their needs? That’s an open question depending on how much debt they intend to repay or refinance,’ said Mr Lee.
‘And if they are going to lose the controlling stake over STX OSV, it would not be meaningful to hold on to just a small percentage of the company.’
STX OSV ended yesterday at $1.33.