Frasers Property (formerly: Frasers Cpt (FCL))

He has a total deemed interests of 88% via TCC and Inter Bev (Subsi of Thai Bev).

Please correct me if I m wrong.

GG

(21-02-2014, 10:10 PM)valuebuddies Wrote: I just have a question pop into my mind while on my way home. Since Charoen is the controlling shareholder, can he eventually increase his stake to 75%, by way of private placement, rights issues, open market purchase etc, and then launch a mandatory exit offer at a unreasonable price? And since by then he controls 75%, he can approve the EGM himself right?

What came to my mind is not whether is it beneficial for Charoen to do so; but is whether he can do so. And I just wondering what SGX rule is enforced to protect the minority shareholders, I try to search and apparently I found none.

(21-02-2014, 10:19 PM)greengiraffe Wrote: He has a total deemed interests of 88% via TCC and Inter Bev (Subsi of Thai Bev).

Please correct me if I m wrong.

GG

(21-02-2014, 10:10 PM)valuebuddies Wrote: I just have a question pop into my mind while on my way home. Since Charoen is the controlling shareholder, can he eventually increase his stake to 75%, by way of private placement, rights issues, open market purchase etc, and then launch a mandatory exit offer at a unreasonable price? And since by then he controls 75%, he can approve the EGM himself right?

What came to my mind is not whether is it beneficial for Charoen to do so; but is whether he can do so. And I just wondering what SGX rule is enforced to protect the minority shareholders, I try to search and apparently I found none.

He can delist FNN as a whole in the beginning, why would he play this stunt after going thru so many steps?

Indeed, he can pass an EGM special resolution himself which basically gives his absolute control and action with the company. He is just missing a couple of percentage points from a forced delisting so he is unlikely to increase his stake.

My bad, indeed he has been deemed owning 88%. So my questions being:

1. why would he want to list it as he probably has the ability to own everything? Any additional advantage being a listed entity comparing to a subsidiary of a listed entity?

2. am I right to say that he could give a voluntary exit offer at, says, $1 per share; and EGM could be passed through solely by him?

Based on other buddies posting on F&N and FCL, general observations:

i) Thai Towkay high geared post hard fought win at F&N;
ii) He extracted as much as he could from F&N and now currently F&N has about S$1.2bn in debt post the proposed capital reduction of $0.42

http://infopub.sgx.com/Apps?A=COW_Corpor...c13-FN.pdf

Post the next capital reduction - F&N likely to be at its optimal capital structure.

iii) seperately listing FCL is likely to be another step to unlock more value from FCL

- FCL has S$3bn (S$2.1bn Singapore $0.9bn overseas) locked in sale from various developments to be booked;
- looking for further asset light via sales to FCT or a new hospitality REIT
- historically high dividend payout of 50% and stated likely payout not exceeding 75% going forward
- more importantly a still generous discount to reported books of $2.15 and possibly even higher discount if revalued book is above $2.50 based on analysts estimates.

Towkay cannot simply call for EGM to delist at ridiculous price that he wishes. Even though he owns 88%, the concerted party is likely to be excluded from voting should such a scenario arises leaving the usual 75% of the minorities to decide on such proposal.

Having said all the above, he is likely to raise further $ from FCL to lower his present gearing via as follows:

- good dividend payout from FCL;
- dilution of his stake in FCL that will raise the much need $ (in bigger amount than dividends). A dilution of his tight control in FCL will also mean higher free float and usually result in better institutional following (higher mkt price, narrower discount to book/revalued asset value).

Vested

(22-02-2014, 10:59 AM)valuebuddies Wrote: My bad, indeed he has been deemed owning 88%. So my questions being:

1. why would he want to list it as he probably has the ability to own everything? Any additional advantage being a listed entity comparing to a subsidiary of a listed entity?

2. am I right to say that he could give a voluntary exit offer at, says, $1 per share; and EGM could be passed through solely by him?

Thank you GG, you got the point!

(22-02-2014, 10:59 AM)valuebuddies Wrote: My bad, indeed he has been deemed owning 88%. So my questions being:

1. why would he want to list it as he probably has the ability to own everything? Any additional advantage being a listed entity comparing to a subsidiary of a listed entity?

2. am I right to say that he could give a voluntary exit offer at, says, $1 per share; and EGM could be passed through solely by him?

1) I had shared the same concern earlier but changed my view after reading quotes that the Thais wanted to split FNN & FCL so as to unlock the conglomerate discount and hence allow both entities to tap the capital markets. This was further augmented when management in FCL announced plans to invest into Thai real estate. To me, this made a lot of sense - Frasers is a brandname with access to much deeper and perhaps cheaper capital markets in Singapore as compared to Thailand. To me, both FNN and FCL will be geared up in time to come, which is much easier+cheaper when both are listed as transparent entities on SGX opposed to being a hidden subsidiary within TCC in Thailand.

2) This is something that I am also concerned abt, but the longer time goes on, the better the situation is. The worst thing you want is to have a very small free float consisting of all ignorant blokes - I'm pretty glad for the sell-down from 1.80+ to 1.40 actually - you really want to get rid of the weak hands and hopefully all those who come on board knows what they are doing and hopefully votes against rubbish resolutions. That said, there's very little OPMI can do if the controlling wants to do something completely destructive so it's really buyers beware and not put all your eggs in the same basket.

(22-02-2014, 01:33 PM)greengiraffe Wrote: Based on other buddies posting on F&N and FCL, general observations:

i) Thai Towkay high geared post hard fought win at F&N;
ii) He extracted as much as he could from F&N and now currently F&N has about S$1.2bn in debt post the proposed capital reduction of $0.42

A small correction, F&N should be in net cash position, even after the $0.42 per share capital reduction.

(22-02-2014, 01:33 PM)greengiraffe Wrote: Towkay cannot simply call for EGM to delist at ridiculous price that he wishes. Even though he owns 88%, the concerted party is likely to be excluded from voting should such a scenario arises leaving the usual 75% of the minorities to decide on such proposal.

I agree. He might need to abstain from voting on the EGM suggested. Furthermore, a special resolution required <10% of AGAINST votes to pass, on top of >75% of FOR votes.

If he really wanted to delist and makan the whole FCL, I think he would probably not had paid any dividends at all. The recent dividend payout is thus a very positive sign and something u wanna follow very closely.

I just don't think a delist of FCL would happen but instead more likely he would wanna sell off a part of his stake if the opportunity arises

However given the weaken in the current property markets, unlocking value may take longer than expected.

Lastly I wanna say, FCL is not a counter that you would wanna make a big bet on.

If I had a bucket of FCLs I would probably do pretty well.

Hi Felix,

Could you clarify your earlier postings:

Lastly I wanna say, FCL is not a counter that you would wanna make a big bet on.

If I had a bucket of FCLs I would probably do pretty well.
[/quote]

GG