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Li & Fung’s Go-Private Plan Gains Final Approvals

Li & Fung’s plan to take itself private has received all necessary approvals and is set to take effect on May 27, the company said Tuesday following its annual shareholders meeting.

In March, the apparel sourcing and logistics company said it was joining with Golden Lincoln Holdings (GLP) to take itself off the Hong Kong Stock Exchange after seven years and in the midst of a global economic downturn brought on by the coronavirus pandemic. The approved plan calls for shareholders to comprise the Fung family, the controlling shareholder of Li & Fung, and GLP Ltd., a global logistics warehouse operator and investor headquartered in Singapore.

An independent board committee recommended current shareholders approve the “founder arrangement” at the company’s general meeting. The plan also received court approval, the company said.

The Fung family controls 60 percent of Li & Fung’s voting shares, with GLP holding the remaining 40 percent of voting shares plus 100 percent of non-voting shares, resulting in GLP having an effective economic ownership of 67.67 percent of the sourcing giant.

Current shareholders are offered 1.25 Hong Kong dollars (16 cents) per share to be paid in cash, a premium of approximately 150 percent over the closing price of 0.5 Hong Kong dollars (6.4 cents) per share on March 20, as quoted on the Hong Kong Stock Exchange. Li & Fung went public on Jan. 2, 2013, trading at 14.54 Hong Kong dollars ($1.86) per share. (Currency calculations are at current exchange rates).

As of Tuesday, the executive directors of the company are Dr. William Fung Kwok Lun, group chairman; Spencer Theodore Fung, group CEO, and Joseph C. Phi. The non-executive directors are Dr. Victor Fung Kwok King, honorary chairman, and Marc Robert Compagnon, and the independent non-executive directors are Margaret Leung Ko May Yee, Dr. Allan Wong Chi Yun, Martin Tang Yue Nien, Chih Tin Cheung and John G. Rice.

For the year ended Dec. 31, Li & Fung said its financial performance was affected by the multi-year trend of destocking and constrained customer sales, as well as record store closures and bankruptcies in the retail industry.

Core operating profit decreased 22.9 percent to $228 million for the year, largely due to reductions in sales and margin pressure in the supply chain solutions business. Sales decreased 10.1 percent to $11.4 billion due to continued destocking by customers, store closures and customer bankruptcies, as well as the company exiting a number of higher-risk and non-strategic customers.

Net profit was $17 million, representing a return to profitability.