Sias calls on Advanced Systems Automation to clarify Asti offer over governance, valuation concerns

[SINGAPORE] The Securities Investors Association (Singapore), or Sias, has called on Advanced Systems Automation to clarify its pre-conditional offer for Asti shares amid governance and valuation concerns.Advanced Systems Automation in January announced its plan to offer two of its new shares for each Asti share, at S$0.005 apiece. This represented a 28.6 per cent discount to Asti’s last traded price of S$0.014 on Jul 4, 2022 prior to its stock being suspended from trading. The offer is subject to the satisfaction or waiver of pre-conditions, including either the resumption of trading of Asti shares, or the approval of a transfer of Asti shares to Advanced Systems Automation if trading does not resume. The exchange should also provide its approval in-principle for the offer, and for the offeror to issue new shares as consideration for the offer. This is also pre-conditional on the offeror’s shareholders’ approval in a general meeting.On Thursday (Feb 12), Sias founder and president David Gerald said while the issue price of each new Advanced Systems Automation share has been set at S$0.005 apiece, the company’s net tangible liabilities per share as at end-December 2024 stood at negative S$0.008. He also pointed out that since Asti resumed trading on the Singapore Exchange on Jan 22, its shares have traded about S$0.03 over the last three weeks. “On this basis, the implied discount to Advanced Systems Automation’s offer has widened materially to in excess of 67 per cent,” said Gerald. Sias requested that Advanced Systems Automation specify who initiated the pre-conditional voluntary offer for Asti and to outline any substantive deliberations undertaken, including the due diligence conducted prior to approving the deal. Sias further requested that the company explain if the independent directors had assessed the probability of success of the offer, particularly in light of its “hostile nature and the discount”. It also called on the company’s independent chairman Chng Hee Kok to clarify if he approved of the offer, and how he had ensured it was made in good faith. The association also sought clarity on how confident the board was that the offer’s pre-conditions, including the grant of approval-in-principle, would be satisfied or waived. It also asked whether an application for the approval-in-principle has been submitted to the Singapore Exchange, and any preliminary feedback received. Reasons for offer Advanced Systems Automation, whose core business is the manufacture of electromechanical components and parts for the semiconductor and consumer electronics industries, said the offer would allow it to expand its in-house capabilities to better serve the semiconductor sector.Asti provides tape and reel packaging, tape making, manpower services and integrated circuit programming to original equipment manufacturers, contract manufacturers and component distributors worldwide.The offeror had said it expects the transaction to lead to synergies that will result in better business prospects, operational efficiency and increased cost savings.It also said that if the offer succeeds, it plans to amalgamate the semiconductor businesses of both companies; list the combined entity or pursue a trade sale; and distribute proceeds or shares to shareholders, while not privatising Asti.Shares of Advanced Systems Automation closed flat at S$0.005 on Wednesday, before the news. Shares of Asti ended flat at S$0.033.