SC Global Developments

is the IFA putting up a joke?

Just wonder why there are shareholders who chose to accept Simon Cheong's offer at 1.80 ,instead of selling at more than 1.90 in the open market ?

I must say analysts are paid to be analytical and creative. Personally I do not think that Simon Cheong will be contented to recede control of his own company. On the other hand, Wheelock is also a bargain hunter but may not wish to control SC Global. If they has wanted to gain control, they would have approached Simon long time back. Conversely, if SC Global is facing financial difficulties, Simon would have approached Wheelock or called for rights issue already. Interesting reading though.

DMG:

Scoop of the Day: The independent financial advisors (IFA) appointed to
advise the independent directors of SC Global in respect of Simon’s Cheong
privatisation move has recommended that shareholders accept the offer or
sell in the market if they are able to obtain a price higher than the offer price
in the open market. It deems the offer price to be fair and reasonable given
the uncertain outlook for the luxury residential segment as well as the
substantial inventory of unsold units that the company is currently holding.
SC Global’s completed developments with unsold stock includes 34 units at
the Marq, 196 units of Hilltops, 23 units at Martin No 38, implying take-up
rates of 49%, 19% and 74%, respectively. In addition, the group’s Sentosa
project, Seven Palms @ Sentosa Cove, is currently only 30% sold while
Sculptura Ardmore has yet to be launched. Based on the IFA’s RNAV of
$2.16-2.25/share, Simon Cheong’s offer of $1.80 is at a discount of 17-20%
discount to its valuation. As Simon Cheong and concert parties already
owned 60.74% of SC Global, there is also no likelihood of a counter-offer
from third parties. Wheelock with its 16% stake in SC Global now holds the
key as to whether Simon Cheong will be able to successfully privatied SC
Global and in the process avoid the hefty extension charges for completed
and unsold inventory after two years. A possible compromise, in our view, is
a merger of the two companies, which we see as highly complementary
given the common focus on the luxury end of the residential market.
Wheelock gets to replenish its landbank in one stroke while SC Global gets
the backing of Wheelock’s strong balance sheet. A merger with Wheelock
would not solve SC Global’s issue with penalty charges, but would certainly
alleviate any further financial stress from stretching its gearing further from
paying the penalty charges. (Goh Han Peng)

to call a right issue for Simon Cheong, it is unlikely because he need to fork out most of money from his own pocket. Simon Cheong may be rich, not that rich to support a few hundred of million dollars right issue. He will try his best to refinance til not being able to.

If Simon Cheong really wants to privatize and Wheelock is not willing to sell, the solution will be to split the assets. Wheelock never interest in the "peanut" from sale of its share of SC Global. It is more interested in the assets SC Global owns.

The following L&T's analyst report on SC Global, it will be interesting to see what will Wheelock "responses" to IFA estimate of SC Global RNAV of $2.16 to $2.25. Based issued statement to SGX by Wheelock, the SC Global offer price of $1.80 is a discount of some 40% to 50% of the RNAV of SC Global or between $3 to $3.6.


PrimePartners, independent financial
advisors, concluded that based on 16% / 20%
discount to RNAV of $2.16 / 2.25 a share
(compared to 38% for Cheng Wai Keung’s partial
offer for Wing Tai), Simon Cheong’s $1.80 offer
is “fair and reasonable”. They did not however,
unlike JP Morgan advising on TCC Assets / OUE’s
respective offers for F&N, say whether the offer is
“compelling”.
 It is a fact that RNAVs are “subjective” being
dependent on assumptions, which necessarily vary
according to financial analysts.
 Take the example of SCG’s condo at Cairnhill Circle
Hilltops, where sales have long stalled with 196
units out of 241 total, still unsold after TOP. Units
were going for up to $4800 psf, but mostly well above
$3000 psf in 2007. Currently, units at Hamilton @
Scott are going for <$3000 psf.
 Wheelock Prop has not bought any more shares after
the purchase of 1,066,000 shares on Dec 13 at $1.81
and which helped drive the stock to a high of $2.08.
The 8% retracement since can be attributed to lack
of follow-through by Wheelock.
 Wheelock’s “response” to PrimePartners’ RNAV
estimates will likely determine SC Global’s share price
leading to the Wed Jan 16th closing date for SC’s
offer, which has so far attracted acceptance of 323,330
shares, unless extended or revised.

http://www.remisiers.org/cms_images/rese...122012.pdf

Just don't understand why there are people who were willing to accept Simon Cheong's offer of 1.80 , instead of selling in the open market for much higher price, is there any other special reason ?

(29-12-2012, 09:37 AM)Stocker Wrote: Just don't understand why there are people who were willing to accept Simon Cheong's offer of 1.80 , instead of selling in the open market for much higher price, is there any other special reason ?

Either they are blur and anyhow signed off the acceptance or could there be some hanky-panky going on - runners buying from mkt only to accept at losses to edge SC Global towards delisting - ie crossing 90% level to warrant a trading suspension?

Don't read too much as acceptance must be above board and all validated.

I am just stretching my imaginations.

GG

(29-12-2012, 11:24 AM)greengiraffe Wrote:

(29-12-2012, 09:37 AM)Stocker Wrote: Just don't understand why there are people who were willing to accept Simon Cheong's offer of 1.80 , instead of selling in the open market for much higher price, is there any other special reason ?

Either they are blur and anyhow signed off the acceptance or could there be some hanky-panky going on - runners buying from mkt only to accept at losses to edge SC Global towards delisting - ie crossing 90% level to warrant a trading suspension?

Don't read too much as acceptance must be above board and all validated.

I am just stretching my imaginations.

GG

Thanks GG.

There are institution nominees who must accept the offer if the independent financial advisor and the independent directors have accepted the offer. They play by rules, not necessarily by reason.

The following is extracted from the SC Global latest announcement. Furthermore, there is also another announcement with respect to the 27th Dec 2012 report by DMG on the possibility of merging SC Global and wheelock. There is also stated that the analyst is a shareholder of both Wheelock and SC Global.

"The Board notes that the writer of the Article was, as of the day before the date of publication, a shareholder of both the Company and Wheelock Properties (S) Limited (“Wheelock Properties”)."

http://info.sgx.com/webcoranncatth.nsf/V...40020D1B8/$file/SCGlobal_Clarification_Statement_on_DMG_Article.pdf?openelement

"The Offeror has no intention of increasing the Offer Price and, accordingly, the Offer Price of S$1.80 for each Offer Share is the final price."

"In the event the Offeror acquires an additional 10.04% of the Shares in issue, the free float will fall below the minimum threshold of 10% required under Rule 723 of the SGX Listing Manual"

http://info.sgx.com/webcoranncatth.nsf/V...4002BD54A/$file/Annc_No_Increase_30_Dec.PDF?openelement