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David Evans

Shareholders of Lane Crawford International have overwhelmingly approved an offer by parent Wheelock & Co to take the company private.

 Only 1 per cent of shareholders voted against the proposal at a special general meeting yesterday.

 The move ends direct public participation in the 149-year-old upmarket retailer, which has been listed since before World War II.

 Wheelock will pay $12.50 for each Lane Crawford A share that it does not already own - 3.3 per cent more than the stock's $12.10 closing price on Friday - and $1.25 for each B share - 5.93 per cent more than Friday's $1.18 close.

 The shares will stop trading on July 21 and will be formally withdrawn on July 30.

 Wheelock and Lane Crawford chairman Gonzaga Li Wei-jen said the offer would allow shareholders to reinvest in securities or other investments that should render better returns than Lane Crawford could now offer.

 'The proposal represents the best rationale for all minority shareholders to realise their investments for cash at a price which they would not otherwise likely be able to obtain under current market conditions,' he said.

 Wheelock's offer valued Lane Crawford at $1.41 billion.

 The company increased its offer from $1.33 billion last month after dissident shareholders, led by private investor and former Wheelock Capital director David Webb, threatened to vote against the proposal.

 The investors hold more than 10 per cent of the company's public B shares, sufficient under Securities and Futures Commission rules to block a privatisation.

 Mr Webb said his group had abstained from voting on the new proposal.

 He claimed it had achieved a small victory for minority shareholders through the modest increase in the offer price.

 However, the offer was still short of the net asset value (NAV) of about $16.54 per A share, he said.

 According to the offer document, the adjusted price offered by Wheelock represented a discount of 32.3 per cent to Lane Crawford's consolidated net assets on March 31.

 Two assets were at the heart of the investors' objections to the planned privatisation - Lane Crawford's investment portfolio and its flagship store in Central.

 According to Wheelock, the portfolio - comprising mainly blue-chip stocks - was valued at about $500.9 million on June 4.

 Lane Crawford's prize property asset, Lane Crawford House in Queen's Road Central, was valued at $916.2 million on May 31.

 The investors said Wheelock's offer represented an unacceptable discount to NAV.

 The privatisation proposal followed several disastrous years for the retailer, during which it underwent a failed expansion in Singapore and an unsuccessful diversification in Hong Kong.

 Prior to the privatisation bid, Lane Crawford stock was trading at about a quarter of its NAV.

 Announcing the offer in May, Wheelock said the retail market had remained 'very difficult', with no sign of an imminent upturn.

 The company recorded an operating loss of $54.5 million for the six months to September 30, following a loss of about $46.2 million for the whole of the financial year to March 31 last year.

 Last month, the department-store operator reported a net loss of $66.6 million for the year to March 31.

 Conglomerate Wheelock - whose interests include property, telecommunications, cable television, transportation and retailing - was accused by the investors of capitalising on negative sentiment in the retail market to privatise Lane Crawford at a substantial discount.

 Wheelock and related parties owned - directly and indirectly - an aggregate 74.72 per cent of the issued A-share capital and 74.95 per cent of the issued B-share capital of Lane Crawford.

Page 12 



Lane Crawford gets nod to go private