Citic, KKR Offer S$1.2 Billion to Purchase United Envirotech

By Cathy Chan and Joyce Koh

Citic Ltd. (267), the main listed unit of China’s biggest group of businesses, and KKR & Co. offered to buy United Envirotech Ltd. (UENV) for S$1.2 billion ($930 million).
Citic and KKR will jointly bid S$1.65-a-share in cash and make a comparable offer for convertible bonds held by KKR in a transaction that values the Singapore-listed target at S$1.9 billion, according to a statement today. Hong Kong-based Citic will become the biggest shareholder of the company, a Chinese provider of water-treatment services, following the deal.
The transaction will be Citic’s first acquisition since its government-backed parent moved the majority of Citic Group’s assets from Beijing to Hong Kong in August in an effort to encourage more overseas investments and boost the
financial performance of state-owned enterprises. Citic plans to develop United Envirotech as its primary water and waste-water treatment business.
“Environmental protection is a top priority for China,” Wang Jiong, Citic’s vice chairman and president, said in the statement.
Citic will control at least 50.6 percent in CKM (Cayman) Co., the new company making the offer, while KKR will have a 23.8 percent stake, according to a statement to Singapore’s stock exchange. Their stakes in CKM may increase to as much as 67.4 percent and 36.2 percent respectively, it showed.

Convertible Bonds

The bid has already received 51 percent acceptance from United Envirotech shareholders. Investors including United Envirotech’s Chief Executive Officer Lin Yucheng have committed to accepting the offer, which is conditional on getting regulatory approvals in China, according to the statement.
KKR is selling shares and convertible bonds valued at about S$665 million, based on calculations by Bloomberg News. It will receive about a third of that in cash and the remainder as shares in the bidding company, according to the statement.
Following the completion of the offer, Citic and KKR will buy from S$50 million to S$150 million of shares in United Envirotech. Citic will provide a S$1.27 billion loan to fund the acquisitions to CKM.
United Envirotech, which was halted from trading in Singapore on Nov. 7, last closed at S$1.515, giving the company a market value of S$1.38 billion.