Thai Beverage Public Company

F&N says in beer spat with Myanmar partner

SINGAPORE - Singapore property and drinks conglomerate Fraser and Neave said on Thursday its joint venture partner, which is run by the Myanmar military, plans to start arbitration proceedings over the company’s stake in Myanmar Brewery.

The brewery represents only a small part of F&N’s business but losing its stake would mean being shut out of one of Asia’s fastest growing beer markets. In a May earnings briefing, F&N said its Myanmar beer business had recorded double digit growth from a year earlier.

F&N, which is controlled by Thai billionaire Charoen Sirivadhanabhakdi, currently holds 55 per cent of Myanmar Brewery while Myanmar Economic Holdings Ltd (MEHL) holds the remaining 45 per cent.

In a statement, F&N said the Myanmar company was trying to obtain its share in the brewery by citing a joint venture agreement. MEHL officials could not be reached for comment.

“The company maintains that there is no basis for MEHL to give that notice. The company has engaged lawyers and intends to vigorously resist the claim,” the F&N statement said.

Myanmar Brewery, which manufactures beer brands such as Myanmar Beer, Myanmar Double Strong and Andaman Gold, is estimated to have an 83 per cent share of Myanmar’s growing beer market by volume, F&N said in a recent presentation.

“Myanmar Brewery is important to F&N because of the emerging market exposure, the growth story for Myanmar is pretty strong and they are the dominant brewer,” said Mr Jit Soon Lim, head of Southeast Asia equity research at Nomura.

F&N said on Tuesday it would list shares in its property arm, Frasers Centrepoint, on the Singapore Exchange this year. F&N will keep the food and beverage as well as the publishing and printing businesses. REUTERS

(29-08-2013, 04:21 PM)freedom Wrote: CityFarmer, we have exactly opposite views on the benefits.

Minority shareholders in F & N are unlikely to get a free ride on Mr. Towkay's tail. The ones to be benefited should be Mr. Towkay and Thai Beverage. They are the ones who put out their efforts to create values, not the minority shareholders of F & N or the management of F & N. Mr. Towkay benefits from the demerger of the property business and the beverage business no matter what price FCL and F & N are. However, for minority shareholders, you are only benefited if FCL & F & N trades high enough.

Thai Beverage shareholders benefits even more. It has gone through a great length and deserves all the benefit. The price after the acquisition of F & N shares and today's huge run-up are the clear indications.

As OPMI (Outside Passive Minority Investor), I never expect to benefit the same as Mr. Towkay and his concerted parties. In fact, I will be very happy upon no intended suppression on minority from Mr. Towkay. It is perfectly fair, with his/his partners' contributions.

However, I didn't see Thaibev's shareholders will benefit more than F&N's shareholders, at least not now. For those bought the F&N with price tag below $8.8, will benefit more, am I right?

(not vested in ThaiBev, but in F&N)

(30-08-2013, 10:25 AM)CityFarmer Wrote:

(29-08-2013, 04:21 PM)freedom Wrote: CityFarmer, we have exactly opposite views on the benefits.

Minority shareholders in F & N are unlikely to get a free ride on Mr. Towkay's tail. The ones to be benefited should be Mr. Towkay and Thai Beverage. They are the ones who put out their efforts to create values, not the minority shareholders of F & N or the management of F & N. Mr. Towkay benefits from the demerger of the property business and the beverage business no matter what price FCL and F & N are. However, for minority shareholders, you are only benefited if FCL & F & N trades high enough.

Thai Beverage shareholders benefits even more. It has gone through a great length and deserves all the benefit. The price after the acquisition of F & N shares and today's huge run-up are the clear indications.

As OPMI (Outside Passive Minority Investor), I never expect to benefit the same as Mr. Towkay and his concerted parties. In fact, I will be very happy upon no intended suppression on minority from Mr. Towkay. It is perfectly fair, with his/his partners' contributions.

However, I didn't see Thaibev's shareholders will benefit more than F&N's shareholders, at least not now. For those bought the F&N with price tag below $8.8, will benefit more, am I right?

(not vested in ThaiBev, but in F&N)

Sure, those investors bought F & N with price tag below 8.8 benefit more than those bought above 8.8.

But compared to Thai Beverage? May I know in what way those investors bought the F & N with price tag below $8.8 benefit?

My view is that they only benefit from the higher market price. But whether the market price can be that high is highly doubtful because F & N never traded too high before OCBC & Great Eastern sold their stake. There is no indication that F & N or FCL will trade higher after the demerger(at least current price does not reflect it at all). TCC and Thai Beverage is very careful that they don't distribute too much cash. So special dividends is highly unlikely in the future.

So ultimately, the benefit for investors in F & N relies on the market and the market clearly is not pricing it high. Actually I have even more pessimistic view on the market price of F & N after the demerger. My guess is that in the eventual structure, Thai Beverage will hold 50 - 60% of F & N and TCC will hold none or minimum. All operational expansion will likely only happen on Thai Beverage side.

For Thai Beverage, the benefit is operational. Actually, the lower the price of F & N, the better for Thai Beverage to buy more.

(30-08-2013, 10:58 AM)freedom Wrote: Sure, those investors bought F & N with price tag below 8.8 benefit more than those bought above 8.8.

But compared to Thai Beverage? May I know in what way those investors bought the F & N with price tag below $8.8 benefit?

There was two ways at least. Firstly, those bought F&N before the GO. Secondly, those bought it after the GO, from index funds.

(30-08-2013, 10:58 AM)freedom Wrote: My view is that they only benefit from the higher market price. But whether the market price can be that high is highly doubtful because F & N never traded too high before OCBC & Great Eastern sold their stake. There is no indication that F & N or FCL will trade higher after the demerger(at least current price does not reflect it at all). TCC and Thai Beverage is very careful that they don't distribute too much cash. So special dividends is highly unlikely in the future.

So ultimately, the benefit for investors in F & N relies on the market and the market clearly is not pricing it high. Actually I have even more pessimistic view on the market price of F & N after the demerger. My guess is that in the eventual structure, Thai Beverage will hold 50 - 60% of F & N and TCC will hold none or minimum. All operational expansion will likely only happen on Thai Beverage side.

For Thai Beverage, the benefit is operational. Actually, the lower the price of F & N, the better for Thai Beverage to buy more.

The final outcome of F&N's F&B and ThaiBev is yet clear now. If it happens as described, than ThaiBev is the controlling shareholder, and any proposal on ThaiBev with expense of F&N, is an IPT, and under general meeting approval.

Anyway, let's see in due course. I might be wrong.

(30-08-2013, 11:19 AM)CityFarmer Wrote:

(30-08-2013, 10:58 AM)freedom Wrote: My view is that they only benefit from the higher market price. But whether the market price can be that high is highly doubtful because F & N never traded too high before OCBC & Great Eastern sold their stake. There is no indication that F & N or FCL will trade higher after the demerger(at least current price does not reflect it at all). TCC and Thai Beverage is very careful that they don't distribute too much cash. So special dividends is highly unlikely in the future.

So ultimately, the benefit for investors in F & N relies on the market and the market clearly is not pricing it high. Actually I have even more pessimistic view on the market price of F & N after the demerger. My guess is that in the eventual structure, Thai Beverage will hold 50 - 60% of F & N and TCC will hold none or minimum. All operational expansion will likely only happen on Thai Beverage side.

For Thai Beverage, the benefit is operational. Actually, the lower the price of F & N, the better for Thai Beverage to buy more.

The final outcome of F&N's F&B and ThaiBev is yet clear now. If it happens as described, than ThaiBev is the controlling shareholder, and any proposal on ThaiBev with expense of F&N, is an IPT, and under general meeting approval.

Anyway, let's see in due course. I might be wrong.

It is very easy to bypass IPTs. For example, F & N as an independent company, might want to develop their own beverage. But under Thai Beverage, Thai Beverage can ask F & N not to do that and develop the beverage itself and sell in F & N's distribution network. In a way that F & N loses its independent thinking for grwoth, but as a step stone for Thai Beverage. Just look at Serm Suk and F & N could be just like it.


Of course, the future is so uncertain. There is not exactly point to argue much. But if I am the owner of Thai Beverage, that would be my strategy.

Thai Bev has no $. FNN has $. Likely minimal dilution of ThaiBev's stake in FNN (assuming post stake swap with TCC), just enough to satisfy free float requirements, so FNN can keep paying high dividends to feed the parent and so together pay the credit card bills.

FCL will be an ATM for TCC to inject assets. FCL shareholders or REITS will cough out the $. Likely TCC will have declining but controlling stake in FCL because it wouldn't want to cough out the $ to pay itself.

These 2 "groups" will have different path forward in terms of corporate structure. Investors will have to figure out how does OPMI benefits in this scenario. We shall see.

(30-08-2013, 11:28 AM)freedom Wrote: Of course, the future is so uncertain. There is not exactly point to argue much. But if I am the owner of Thai Beverage, that would be my strategy.

I wish it will be a win-win game between shareholders of ThaiBev and F&N, instead of a zero-sum game.

with the new political pressure in Thailand, possible to enter this beverage company in a lower price in the near future. Good time ahead.

Rating not good, than withdraw from it, and keep the good rating one?

(not vested)

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Thai Beverage Public Company Limited understands due to recent changes in corporate ratings criteria by Standard & Poor's Rating Services, including group rating methodology announced on November 19, 2013, the Company has been placed on credit watch negative (BBB-/Watch Negative) on November 26, 2013. In view of this, THBEV has decided to respectfully request for withdrawal of rating service with S&P

Ref: http://infopub.sgx.com/FileOpen/Response...eID=266614

(04-12-2013, 11:08 AM)CityFarmer Wrote: Rating not good, than withdraw from it, and keep the good rating one?

(not vested)

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Thai Beverage Public Company Limited understands due to recent changes in corporate ratings criteria by Standard & Poor's Rating Services, including group rating methodology announced on November 19, 2013, the Company has been placed on credit watch negative (BBB-/Watch Negative) on November 26, 2013. In view of this, THBEV has decided to respectfully request for withdrawal of rating service with S&P

Ref: http://infopub.sgx.com/FileOpen/Response...eID=266614

Is rating service similar to audit service? Where the client pays the auditor, in this case the rating agency, to assess the client's health? If so, there will be inherent tension and fundamental conflict of interest.