Paulson & Co. Urges Neptune Orient (SGX: NOL) Board to Seek Competitive Bids
New York (ots/PRNewswire)
Paulson & Co., Inc. announced today that it has sent the following letter to the Board of Directors of Neptune Orient Lines Limited:
Mr. Cheng Wai Keung
Chairman
Neptune Orient Lines Limited
456 Alexandria Road
NOL Building #06-00
Singapore, 119962Dear Mr. Keung,
We are a New York-based money management firm focusing on special
situations on a global basis. As of September 1, 2004, we owned
87,422,000 shares in Neptune Orient Lines ("NOL"), representing 6.05%
of the shares outstanding. We purchased the stock because we are
attracted by the low valuation and strong financial performance of
NOL.While the Temasek S$2.80 offer for NOL represents a premium to where the Company's shares had previously traded, we believe it is significantly less than what NOL would receive in an open auction process. According to HSBC, the financial advisor to the independent directors of NOL, the S$2.80 offer values NOL at an enterprise value multiple of only 3.2x LTM EBITDA, as compared to an average of 5.6x for similar completed transactions in the industry, or more than a 40% discount to precedent transaction multiples. Similarly, the multiple offered is 50% less than the average of 6.7x for the industry publicly traded comparables, as computed by HSBC. Furthermore, due to NOL's strong current growth in earnings, with second quarter 2004 EBITDA up 44% from the previous year, research analysts estimated in a recent report that Temasek's S$2.80 offer values NOL at an enterprise value multiple of only 2.2x 2004 EBITDA and only 1.7x 2005 EBITDA.
As a significant shareholder, we would like the Board of Directors of NOL (the "Board") to take a more active role to ensure that the full value of NOL will be achieved in a sale. Merely rejecting the offer and not taking an active role facilitates Temasek's ability to acquire NOL at the current offer price. Furthermore, stating that no other competing offer has emerged as an indication of the fairness of Temasek's offer fails to recognize the reluctance of potentially interested parties to enter a competitive bidding process without the invitation of the Board. Unless Temasek makes a compelling offer, we feel that it is incumbent upon the Board to actively solicit other potential acquirers to ensure that NOL shareholders receive full value.
We believe that numerous private equity firms and strategic shipping companies would be interested in acquiring NOL if the company were to solicit potential acquirers. Opening up the bidding process to include other potential acquirers as well as Temasek would ensure that NOL shareholders receive maximum value for their shares. We have no objection to Temasek acquiring NOL in a process that maximizes value for all shareholders and in a way that encourages other potential purchasers to emerge.
In summation, we think that in an open auction process, NOL would be worth considerably more than the price Temasek is offering. Therefore, we urge the Board to actively solicit other buyers as a means of ensuring maximum value for all shareholders.
Given the importance of this matter to shareholders of NOL, we intend to publicly disclose this letter via press release.
Sincerely,
John Paulson
President
Paulson & Co. Inc. is an institutional investment firm that manages approximately US$2.9 billion of assets on behalf of U.S. and international investors. The firm was established in 1994 by John Paulson.
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