SINGAPORE - Shareholders of Singapore Press Holdings (SPH) have overwhelmingly backed its plan to hive off its media business, paving the way for the formation of a new company limited by guarantee (CLG), while potentially unlocking shareholder value for the mainboard-listed company.

At a virtual extraordinary general meeting held on Friday (Sept 10), 97.55 per cent of shareholders voted in favour of the transfer of SPH's media business to the CLG for a nominal sum of $1.

They also gave the green light to a special resolution to convert each management share held by a management shareholder into one ordinary share, and the adoption of a new Constitution.

Some 369 million shares were represented by votes cast at the EGM, which was helmed by SPH chairman Lee Boon Yang, chief executive Ng Yat Chung and chief financial officer Chua Hwee Song. More than 300 shareholders voted by proxy.

The move is the first step of a strategic revamp that could see the privatisation and sale of the rest of mainboard-listed SPH to Keppel Corp in a $3.4 billion deal. Shareholders of both companies will vote on the proposed acquisition at a later date.

SPH, which publishes The Straits Times, announced its plans to transfer the media business to a not-for-profit company as part of a strategic review of its various businesses on May 6.

The restructuring entails transferring all media-related businesses, including relevant subsidiaries, employees, the News Centre and Print Centre along with their respective leaseholds, as well as all related intellectual property and information technology assets, to a newly incorporated, wholly-owned subsidiary, SPH Media Holdings.

The new CLG will initially receive financial help from SPH, comprising $80 million in cash and $30 million in shares.

It will be chaired by former coordinating minister for infrastructure and transport minister Khaw Boon Wan, with veteran journalist and former SPH deputy chief executive Patrick Daniel as interim chief executive.

Mr Khaw said after the voting results that he welcomes the shareholders' decisions, as the current business model is not sustainable.

"Delisting the media business is however only a first step, but a critical one. As a CLG, we will do our utmost to carry out the mission of providing quality journalism for Singaporeans. We want high-quality products which are relevant to our readers, to help them make sense of the world.

"There is much to do by the CLG to further secure SPH Media's future. But there will still be a transition period before the listed SPH hands over control to the CLG. I hope that the transition will not be too long, so that we can start our work soon."

Shareholders will next vote on Keppel's $2.2 billion bid to privatise SPH's non-media business. An EGM for this will be called in October or November.

Under the proposed scheme, they will receive $2.099 per share, comprising cash of 66.8 cents per share, 0.596 Keppel Reit units valued at 71.5 cents per share, and 0.782 SPH Reit units valued at 71.6 cents per share.

With the demerger, SPH will also no longer be subject to the provisions of the Newspaper and Printing Presses Act (NPPA), which limits each shareholding to only 5 per cent.

In light of the Covid-19 regulations on general meetings, voting was done by proxy ahead of the meeting. Shareholders were also asked to submit questions at least 72 hours beforehand.

The EGM, which lasted about 90 minutes, was conducted via a live webcast.

Questions that were submitted in advance by shareholders were addressed by Mr Ng as part of a presentation that covered the key points of the restructuring plan. Shareholders were then allowed to take part in a live Q&A by using a chat function on the webcast platform.

More than a dozen questions were posed, ranging from the timing of the restructuring to the pressures faced by the media arm, as well as balancing shareholders' interests with that of other stakeholders and the public good. For instance, one question was on the cost of restructuring.

Mr Lee acknowledged that it would be ideal from the shareholders' perspective to send the media business "lock, stock and barrel" to the CLG without having to make a cent of contribution.

However, he noted that there is another point of view to be considered, that is, why should the CLG take on a loss-making business without financial assistance and instead ask taxpayers to pay for it?

"It has to be a joint effort," he said.

He noted that SPH shareholders have benefited over the years from the profits of the media business. "So it is not unreasonable that... when the tide turns and we have to seek a new model to sustain the media operations, the beneficiaries also make a small contribution."

With the CLG's incoming chairman and interim CEO already announced, another shareholder noted that the demerger seems to be a "done deal", and questioned the need for the EGM.

In response, Mr Lee noted that these are preparatory measures that are in line with good governance principles.

"We cannot leave the media consumers in Singapore with a vacuum. The newspapers have to be printed every day, the stories have to be updated by the minute, every event has to be covered," he said.

Mr David Gerald, the president and chief executive of the Securities Investors Association (Singapore), said the overwhelming support for the two resolutions paves the way for SPH shareholders to now consider the privatisation proposal of SPH by Keppel.

He added: "I am confident that the shareholders of SPH will do what is good for them."

Shares of SPH ended flat at $1.94 on Thursday, before a trading halt on Friday.