Emaar raises RSH stake, triggering offer

DUBAI-based Emaar Properties is buying all the shares in sporting products retailer RSH Corporation that it does not already own, in a deal that values RSH at $271.5 million.
In a stock exchange filing, RSH, which runs the Royal Sporting House chain, said Emaar has taken over a debt of US$160 million that comes with 216.17 million charged shares in RSH, or 61.3 per cent of the company.
RSH’s majority shareholder Golden Ace, which pledged the shares, has defaulted on loans from Deutsche Bank, and the bank threatened earlier to seize the shares.
As Emaar has taken over the debt, it now has the ability to exercise voting rights over 286.2 million RSH shares, representing 81.17 per cent of the company.
In accordance with the code on takeovers and mergers, Emaar will make a mandatory unconditional cash offer for all RSH shares other than the charged shares and those it already owns.
The offer price represents a 92.5 per cent premium to RSH’s last-traded price of 40 cents on May 22.
However, Emaar said the shares have been very thinly traded, with only 6,000 changing hands in the past six months and 28,000 in the past 12 months. ‘Therefore, the use of trading statistics as a measure to determine the offer price will not be meaningful,’ it said.
At March 31, 2009, RSH had a cash balance of $41.5 million and liabilities of $252.5 million.
The company sank deeper into the red in its fourth quarter as revenue dipped, and said it was looking to consolidate some of its Australian business.
It posted a net loss of $6.6 million for the three months ended March 31, against a net loss of $5.3 million for the year-ago corresponding period. The results translate to a loss of 1.87 cents a share, compared with a loss of 1.5 cents a share a year ago.
RSH, which used to be known as Royal Sporting House, is a distributor and retailer of sports, golf, and fashion products.
Over the past three decades, the company has built a retail network incorporating more than 430 free-standing stores and 570 ’shops-in-shop’ in 12 countries.
The company was bought by Golden Ace – a joint venture between Emaar Properties and Indian real estate developer MGF – in 2007.
Source : Business Times – 20 Jun 2009
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