Sunningdale Technology

Activist fund Quarz urges Sunningdale Tech to return cash to shareholders

SINGAPORE - Activist fund Quarz Capital Management has found a new target in mainboard-listed high-precision plastic components maker Sunningdale Tech.

In an open letter to the board on Thursday (Dec 13), Quarz urged Sunningdale to return more cash to shareholders, by distributing at least 60 per cent of core net income in 2019 as dividends.

https://www.straitstimes.com/business/co...areholders

Last evening announcement
The board of directors of the Company wishes to inform shareholders of the Company that the Company has been approached in relation to a possible transaction involving the shares of the Company. 
https://links.sgx.com/FileOpen/Holding_A...eID=631090

Stay safe and stay healthy, everyone.

Sunningdale - Proposed acquisition by SunRise
in consideration of the transfer of the Scheme Shares referred to in paragraph 3.1.1 above, each Scheme Shareholder as at the Record Date will be entitled to receive for each Scheme Share (the “Scheme Consideration”), at their election:
(i) S$1.55 in cash (the “Cash Consideration”); or
(ii) in lieu of the Cash Consideration, 1,550 HoldCo Shares, which HoldCo shall allot and issue, duly authorised, fully paid and free from all Encumbrances, at an issue price of S$0.001 per HoldCo Share (the “Issue Price”, and such 4 consideration the “Scrip Consideration”), provided always that no more than 49,834,136,123 HoldCo Shares, subject to the adjustment in paragraph 3.1.4 below, may be issued as Scrip Consideration (the “Maximum Number”).


Stay home and stay safe, everyone.

I am a shareholder and below are purely my opinions.
I feel this is not the end of the story yet. 

The offer price of $1.55 does not seem very attractive whether pre/during/post pandemic. This is the type of companies in the type of industry that would often get interest and offers. So many of these had been delisted (and relisted) from SGX in the past 10+ years.

I am not very experienced with schemes and this scheme of offering shares in an unlisted holdco is very fresh to me. Maybe it is to cater to staff shareholders (and Goi and Yarwood whom still wants to be in). I think almost all outside shareholders will not want to hold unlisted shares in sunningdale.

Para 3.4 Switch Option
3.4.1 Pursuant to the terms of the Implementation Agreement, in the event a Competing Offer (as defined below) or an intention to make a Competing Offer is announced whether or not such Competing Offer is pre-conditional), the Offeror shall have the right at its sole discretion to elect to proceed by way of a voluntary conditional cash offer or a preconditional voluntary cash offer made for or on behalf of the Offeror to acquire all the Sunningdale Shares on such terms and conditions to be set out in the offer document issued for or on behalf of the Offeror (the “Offer”) in lieu of proceeding with the Acquisition by way of the Scheme (the “Switch Option”), at any time prior to the date on which the Scheme Meeting (as defined in paragraph 7.1.1 below) is to be held.

The shareholding is very very fragmented. The offerer and undertaking shareholders don't have a significant stake (not even close to 50% of votes eligible). I have not done the maths. Just base on who had committed to vote for and who cannot vote, the % is not even close to hitting target.

Quarz who had been quite vocal on sunningdale previously and became a 5% holder recently hadn't spoken yet. Maybe busy with sabana but I am sure they will say something soon.

(18-11-2020, 09:56 PM)Mushy Wrote: The shareholding is very very fragmented. The offerer and undertaking shareholders don't have a significant stake (not even close to 50% of votes eligible). I have not done the maths. Just base on who had committed to vote for and who cannot vote, the % is not even close to hitting target.

Hi Mushy, 

As you might have known, a scheme of arrangement is a all or none consequence type of offer to take out minorities in a takeover. Meaning, its either I get all the shares or none. As you have stated, the offeror and undertaking shareholders don't have a significant stake. It is exactly this reason why a scheme is used in this case because if they use the General Offer (aka GO) route, they will need 90% of the shares in order to compulsory acquire the remaining shares out there and delist the company. 

Just to recap, a scheme meeting is passed if more than 75% of the value of shares and 50% headcount approved the scheme at the meeting. 

As to your concern on cash or unlisted share option, again, this is not new method of consideration for a scheme. Maybe you could refer to the HMI case study last year where similar consideration was offered to minority shareholders when the company was taken out.

Takeover price for Sunningdale Tech at S$1.55 is 'too low': Quarz Capital

https://www.businesstimes.com.sg/compani...rz-capital

Will probably be voting against the low ball takeover price
Vested.

(14-01-2021, 10:49 PM)ngcheeki Wrote: Takeover price for Sunningdale Tech at S$1.55 is 'too low': Quarz Capital

https://www.businesstimes.com.sg/compani...rz-capital

Will probably be voting against the low ball takeover price
Vested.

It has been quite a long while since the offer was announced.
Does anybody know when will the offeror have to hold the EGM to vote?

Hi Shiyi,

As you might have understand, this takeover offer is structured as a scheme meeting, which needs to apply to the court to convene it. Therefore, the whole process will take sometime as they need to get a court hearing date and then fix the scheme meeting date. So, do be patient and wait for further announcements.

Sunningdale Technology

After reading Quarz Capital statements, I felt very angry.
Not sure how others feel thou.

I just felt angry.

Before I read Quarz Capital statements, I am ok.

After reading, I am really upset.

https://www.theedgesingapore.com/news/ma...king-spree
https://www.businesstimes.com.sg/compani...ent-vendor


Stay home and stay healthy, everyone.


(vested)

Why is there a need to be angry? We can't fault someone on the other side of the trade for wanting to make money - their profit motivation was the key for any proposed transaction to happen in the first place.

I remember d.o.g. once mentioned over here that it is not good enough for OPMI to buy at 0.8X intrinsic value and expect the big shark to privatize at 1X intrinsic value. The big shark needs to make a profit and hence will only offer 0.8X IV. So working backwards for the OPMI, we need to be buying at 0.6X IV for a reasonable chance at profit.

It is only the rare occurrence where big whales are swimming and are aiming to gobble up big sharks, will there be bidding that goes beyond the OPMI's wildest dream (one of the last time on the local market was F&N been courted by both OUE and Chaoren, and that was many years ago). Most OPMIs have to be contended with been the captive seller.