HTL

[desmondxyz]

http://infopub.sgx.com/FileOpen/Proj%20H...eID=390927

Under the Supplemental Agreement, the Parties confirm / agree:
(i) that the final transaction price of the Proposed Acquisition shall be S$1.00 for each Share;

The execution of the Scheme Implementation Agreement between the Offeror and HTL is subject
to prior approvals being obtained from certain bodies and authorities (the “Pre-Conditions”). As
of the date of this announcement, the Offeror is aware that the following Pre-Conditions are
required:
(i) the Proposed Acquisition being approved by the shareholders of Yihua Timber in a general
meeting;
(ii) the Proposed Acquisition being sanctioned by National Development and Reform
Commission of Guangdong Province;
(iii) the Proposed Acquisition being approved by Shantou Administration of Foreign
Exchange; and
(iv) the Proposed Acquisition being approved by Department of Commerce of Guangdong
Province.


Final offer price is $1 and the pre-condition doesn't look very stringent..but Mr Market is trading @ 0.66 (-0.04, -5.71%) right now?

Can anyone share some light on this?

[opmi]

Looks like going to take a lot of time. Just use the example of PRC railway equipment CSR merger. at least 6 months.

(i) the Proposed Acquisition being approved by the shareholders of Yihua Timber in a general
meeting;
(ii) the Proposed Acquisition being sanctioned by National Development and Reform
Commission of Guangdong Province;
(iii) the Proposed Acquisition being approved by Shantou Administration of Foreign
Exchange; and
(iv) the Proposed Acquisition being approved by Department of Commerce of Guangdong
Province.

[lanoitar]

Final offer price is $1 and the pre-condition doesn't look very stringent..but Mr Market is trading @ 0.66 (-0.04, -5.71%) right now?

The remaining 3 pre-conditions aren't stringent, but the profit targets are:

Subject to completion of the Proposed Acquisition, BEM agreed to compensate and pay to Yihua Timber:
1. Amt equivalent to the shortfall if FY16 PAT is < US$25m
2. Amt equivalent to the shortfall if FY17 PAT is < US$27.5m
3. Amt equivalent to the shortfall if FY18 PAT is < US$30.25m

Total profit guaranteed fr FY16 to FY18 = US$82.75m (or S$116m).

HTL's PAT for the last 5 years:
FY15 = -S$1.6m, FY14 = S$5.3m, FY13 = S$0.69m, FY12 = S$7.66m, FY11 = S$5.8m

Unless we can assume BEM is doing charity and shouldering this profit guarantee alone, I would imagine that minorities are on the hook. If HTL only breaks even for the next 3 FY's, shareholders will be looking at an offer that's equivalent to $416.6m - $116m = S$300.6m, or 72cents/share (not too far away from the last done price).

Seems to me that Yihua has purposely inflated the acquisition price & PAT targets, so that they can transfer out a big sum of money, and then get it back later. I'll leave it to your imagination as to why they are doing so.

[BlueKelah]

Final offer price is $1 and the pre-condition doesn't look very stringent..but Mr Market is trading @ 0.66 (-0.04, -5.71%) right now?

The remaining 3 pre-conditions aren't stringent, but the profit targets are:

Subject to completion of the Proposed Acquisition, BEM agreed to compensate and pay to Yihua Timber:
1. Amt equivalent to the shortfall if FY16 PAT is < US$25m
2. Amt equivalent to the shortfall if FY17 PAT is < US$27.5m
3. Amt equivalent to the shortfall if FY18 PAT is < US$30.25m

Total profit guaranteed fr FY16 to FY18 = US$82.75m (or S$116m).

HTL's PAT for the last 5 years:
FY15 = -S$1.6m, FY14 = S$5.3m, FY13 = S$0.69m, FY12 = S$7.66m, FY11 = S$5.8m

Unless we can assume BEM is doing charity and shouldering this profit guarantee alone, I would imagine that minorities are on the hook. If HTL only breaks even for the next 3 FY's, shareholders will be looking at an offer that's equivalent to $416.6m - $116m = S$300.6m, or 72cents/share (not too far away from the last done price).

Seems to me that Yihua has purposely inflated the acquisition price & PAT targets, so that they can transfer out a big sum of money, and then get it back later. I'll leave it to your imagination as to why they are doing so.

wah money laundering?

Indeed the terms and conditions are VERY odd. SGX or better yet MAS should launch an investigation or just block the sale.

[specuvestor]

Interesting. Convince SAFE to allow remittance of money offshore and when clawback happens keep the residual offshore?

[thefarside]

Unless we can assume BEM is doing charity and shouldering this profit guarantee alone, I would imagine that minorities are on the hook.

The earlier documents clearly stated that BEM has given the profit guarantee in its own capacity. More importantly, the use of a scheme of arrangement instead of a general offer should convey the intent of the buyer to take the company off the market completely, for their own reasons. At $1, the likelihood of success in a vote should be bullet-proof.

[lanoitar]

Indeed, the profit guarantee agreement is betw BEM and Yihua. The unknown is whether BEM will be compensated by HTL in other ways, and we won't know till the details of the scheme is out. Personally, I think the altruism is too good to be true, and prefer to stay away from this 43% spread arbitrage

[Young Investor]

Final offer price is $1 and the pre-condition doesn't look very stringent..but Mr Market is trading @ 0.66 (-0.04, -5.71%) right now?

The remaining 3 pre-conditions aren't stringent, but the profit targets are:

Subject to completion of the Proposed Acquisition, BEM agreed to compensate and pay to Yihua Timber:
1. Amt equivalent to the shortfall if FY16 PAT is < US$25m
2. Amt equivalent to the shortfall if FY17 PAT is < US$27.5m
3. Amt equivalent to the shortfall if FY18 PAT is < US$30.25m

Total profit guaranteed fr FY16 to FY18 = US$82.75m (or S$116m).

HTL's PAT for the last 5 years:
FY15 = -S$1.6m, FY14 = S$5.3m, FY13 = S$0.69m, FY12 = S$7.66m, FY11 = S$5.8m

Unless we can assume BEM is doing charity and shouldering this profit guarantee alone, I would imagine that minorities are on the hook. If HTL only breaks even for the next 3 FY's, shareholders will be looking at an offer that's equivalent to $416.6m - $116m = S$300.6m, or 72cents/share (not too far away from the last done price).

Seems to me that Yihua has purposely inflated the acquisition price & PAT targets, so that they can transfer out a big sum of money, and then get it back later. I'll leave it to your imagination as to why they are doing so.

wah money laundering?

Indeed the terms and conditions are VERY odd. SGX or better yet MAS should launch an investigation or just block the sale.

Bluekelah

The following Nextinsight article indicates that nothing unusual:

http://www.nextinsight.net/index.php/story-archive-mainmenu-60/938-2016/10636-htl-privatisation-can-it-succeed-at-1-a-share

Will be glad to have your comments on the article.

[flyby]

Hello everyone,

my first post here. a newbie in trading as well, especially when it comes to take over conditions like this.

(i) the Proposed Acquisition being approved by the shareholders of Yihua Timber in a general meeting;
(ii) the Proposed Acquisition being sanctioned by National Development and Reform
Commission of Guangdong Province;
(iii) the Proposed Acquisition being approved by Shantou Administration of Foreign
Exchange; and
(iv) the Proposed Acquisition being approved by Department of Commerce of Guangdong
Province.

Once the remaining 3 of the 4 criterias are met, Yihua will offer $1. It would then be up to HTL shareholders to decide whether to accept the offer or not? 

If shareholders take the $1 offer and cash out, it wouldn't matter to them if HTL cannot hit the profit targets in the future right? That would be up to BEM i suppose?

[swn]

Why the trading halt? Any good news?