OTO will convene the EGM on 19 February 2024 to propose for the shareholders’ consideration the offering for sale of capital shares, through PP, in the amount of 1.2 billion shares at the price of 0.60 baht per share or a total of 720 million baht in value. The objective of the offering is to use the proceeds for investments in Peer for All Company Limited (PFA) and Happy Products and Services Company Limited (HPS).
In this regard, an IFA has expressed the opinion that the offer price of such capital increase shares at 0.60 baht per share is unreasonably lower the OTO’s fair value range of 1.07-1.53 baht per share as appraised by the IFA. Besides, the proposed investments in PFA and HPS are considered inappropriate and involve high risks, since the offer price of 565 million baht for PFA is higher than the PFA’s assessed fair value of 359 million baht and the internal rate of return (IRR) is lower than OTO’s cost of equity and cost of capital. Moreover, the proposed investment of 150 million baht in HPS, or at the price of 16.67 baht per share, is not rational as the HPS fair value assessed by the IFA is 21 million baht or 2.35 baht per share. The IFA has also made an observation about high deposits for shares of those two companies and advised against the approval of the proposed transactions.
As for the acquisition of HPS shares through OTO’s investment, another IFA is of the view that the offer price (at 16.67 baht per share) is unreasonable as it is higher than the company’s assessed fair value range of 2.73 – 3.13 baht per share. In addition, around mid-2023, a listed company reported its sale of 4.5 million HPS shares to another company at the price of 10.08 million baht or 2.24 baht per share. The IFA has also made an observation about deposits for HPS shares which involved a risk that OTO might not receive the deposits back as the value of HPS shares pledged with OTO would not cover the damage of such deposit loss. As such, the shareholders should not approve the proposed transactions.
The OTO Audit Committee has commented on the IFA’ opinion report and disclosed their comments in the SETLink, on 2 February 2024, that the company’s Board of Directors (BOD) and the Audit Committee were of the opinion that the OTO’s proposed offering for sale of capital increase shares through private placement was appropriate. With regard to the company’s investment in HPS, although such investee company has suffered a continuous loss, the adjustments in its business plan have enhanced its business valuation results. The Audit Committee and BOD have therefore considered the proposed transactions reasonable and appropriate in terms of shareholders’ benefits in the long run.
Given the IFAs’ comments on OTO’s proposed transactions as neither reasonable nor worthwhile, which are material issues that may affect the shareholders’ rights, benefits and decisions significantly, the SEC, by virtue of Section 58 of the Securities and Exchange Act B.E. 2535 (1992) (SEA), has ordered OTO’s BOD to make clarifications and submit related documents to the SEC within 14 February 2024 and disclose the clarifications in the SETLink.
OTO shareholders are advised to study information carefully and exercise their rights to protect their own interests, as well as seek further clarifications from OTO executives to obtain comprehensive details for making a voting decision at the EGM.