Cascal to remain neutral on Sembcorp offer

Cascal Board of Directors say stockholders may not realise the value of their shares.

Sembcorp Industries Ltd (Sembcorp) on Monday announces that Cascal N.V. (Cascal) filed an amendment with the U.S. Securities and Exchange Commission (SEC) on 2 July 2010. According to the amendment, Cascal's Board of Directors have withdrew its previous recommendation that stockholders (except Biwater) reject Sembcorp Utilities Pte Ltd's tender offer for all of Cascal's shares and remain neutral regarding the offer.

The Board indicated the change was because of Sembcorp’s announced intentions which include delisting and deregistration of the shares. Cascal says there is a substantial likelihood that no active trading market will exist for the shares and stockholders may not be able to realise value for their shares, in the short-term or long-term, that is comparable to the consideration offered by Sembcorp, an report from Sembcorp said.

Given this risk of illiquidity, the Board has determined to withdraw its recommendations, to remain neutral and to express no opinion regarding the offer, but urges all stockholders to consider their risk of potential long-term illiquidity of their investment versus the risks posed by the offer.

Promptly after consummation of the offer, and in accordance with applicable laws, Sembcorp intends to cause Cascal to (1) delist the Shares from the New York Stock Exchange, (2) suspend Cascal’s obligation to file reports under the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder, pending termination of registration of the Shares under the Exchange Act and (3) terminate the registration of the Shares under the Exchange Act.

If the Shares are delisted, the market for the Shares could be adversely affected. In addition, termination of registration of the Shares under the Exchange Act would reduce the information required to be furnished by Cascal to its stockholders and to the SEC and would make certain provisions of the Exchange Act no longer applicable to the Shares.

Meanwhile, Sembcorp urges Cascal’s stockholders to accept the Offer as soon as possible before it expires on 8 July at 5 p.m.

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