Perennial China Retail Trust

(16-03-2014, 03:23 PM)MINX Wrote:

(16-03-2014, 02:42 PM)greengiraffe Wrote:

(16-03-2014, 11:57 AM)gutman Wrote: This is actually a very smart move. I must say Phua Sek Guan is really a deal maker.

It is probably not easy for retail investor to understand a reverse takeover (or maybe not). Shareholder has been informed to wait for recommendations of the independent directors of the company as well as the advice of the independent financial adviser which will be circulated in due course.

I think a few questions we need to ask is :
1. Do we understand what is a reverse takeover (RTO)?
2. What is it that they can do as a normal company compare to being a business trust? Do we understand what is a business trust in the first place?
3. By doing this RTO, are they unlocking shareholder value?

Answer to 1 & 3 - easier and faster way than a IPO. They will first unlock value for themselves first since they are the vendors

4. Will the move into other markets benefits shareholders? (PCRT is focused purely in China. But the new company is already talking about Myanmar and Singapore.)

They have continued to build up their presence in Singapore by virtue of their familiarity. PCRT is only mandated for China so unless a new mandate can be approved by present shareholders then cleaner way is via a RTO. Myanmar - you are better off betting on Yoma. This is just a frontier where everyone are hopeful - only the juntas know who the ali babas will be...

what I personally don't like about the proposal is there is no alternative way out offered to the exiting minority shareholders as the offer is in shares & not cash. Firstly, we're in the blurr about the new entity whose shares we're obliged to accept. Is the new entity worth the share price proposed? Why are PCRT's china assets volunteered at a 25% discount to its book value, if you want to buy assets from me, a good offer should be one at a premium to book value(74cts), no? The new entity is venturing into Myanmar, a frontier market with high risks, can a bix trust suddenly alter its mandate abruptly like that?

Perhaps it's due to the malls having weak occupancy and generating weak revenue ? I don't recall the Trust ever generating any distributable income since listing.

Personally, this feels like a merger between the trust and its sponsor and the removal of the constraint of operating as a business trust. It is quite weird to be a property developer and yet function as a yield-centric Trust - Forterra and Indiabulls faces the same issue. Better off functioning as a company and retain capital for developing their assets.

(Not Vested)

(16-03-2014, 10:51 AM)MINX Wrote:

(15-03-2014, 10:08 PM)kayhian Wrote: PCRT should publish a easy-to-understand explanation for retail investors.

This deal could be a fantastic one but nobody seems to understand it

Agreed, they just went ahead and changed the business without consulting retail investors or explaining things clearly. It's very bad PR wise.

They still need to call for an EGM to get approval of shareholders, some shareholders will be refrained from voting.

(16-03-2014, 04:21 PM)cfa Wrote:

(16-03-2014, 10:51 AM)MINX Wrote:

(15-03-2014, 10:08 PM)kayhian Wrote: PCRT should publish a easy-to-understand explanation for retail investors.

This deal could be a fantastic one but nobody seems to understand it

Agreed, they just went ahead and changed the business without consulting retail investors or explaining things clearly. It's very bad PR wise.

They still need to call for an EGM to get approval of shareholders, some shareholders will be refrained from voting.

Most likely, most of the investors will vote for the share swap deal as PCRT is facing strong head winds in the China commercial property market. The enlarged entity will allow PCRT to attain lower financing loans to weather the over supply situation in Shenyang. PCRT share holders should be thankful for the 70c swap deal offer, save for those who are vested above 70c.

Here are my takes

St James = a SGX listed Company (Catalist) with entertainment business.

PREH = a private company in real estate business with real estate assets in Singapore and China

“Vendors” = PREH + certain other persons >> owns 26.11% of PCRT

Act 1 = Restructuring of St. James = “divestment” of entertainment business + “injection” of “Vendors” assets (through share swaps) into St. James (inclusive of 26.11% of PCRT)

The “transformed St. James” would be renamed “PREHL” and to be moved from “catalist” to the Main Board of SGX

Act 2 = VGO of remaining units of PCRT

Act 1 would set as a Pre-Condition for Act 2

To me, the traditional classic RTO is Act 1 – “takeover” of “St. James” (a listed entity) by the “Vendors” (PREH，a private company + private investors).

Act 2 is a normal takeover (also through share swaps) .

If Act 2 is unsuccessful, PCRT will remain as it is - as a listed Business Trust.

IMO, to the "Vendors". the significance and importance of the deals is in Act 1.

(not vested)

(16-03-2014, 05:53 PM)Boon Wrote: Here are my takes

St James = a SGX listed Company (Catalist) with entertainment business.

PREH = a private company in real estate business with real estate assets in Singapore and China

“Vendors” = PREH + certain other persons >> owns 26.11% of PCRT

Act 1 = Restructuring of St. James = “divestment” of entertainment business + “injection” of “Vendors” assets (through share swaps) into St. James (inclusive of 26.11% of PCRT)

The “transformed St. James” would be renamed “PREHL” and to be moved from “catalist” to the Main Board of SGX

Act 2 = VGO of remaining units of PCRT

Act 1 would set as a Pre-Condition for Act 2

To me, the traditional classic RTO is Act 1 – “takeover” of “St. James” (a listed entity) by the “Vendors” (PREH，a private company + private investors).

Act 2 is a normal takeover (also through share swaps) .

If Act 2 is unsuccessful, PCRT will remain as it is - as a listed Business Trust.

IMO, to the "Vendors". the significance and importance of the deals is in Act 1.

(not vested)

Thanks for explaining things in simple understandable terms.
Putting yourself in the shoes of PCRT's minority shareholders, do you view this as a ok or raw deal? From what I can figure out from their "not-so'easy-to-understand" announcement, my concerns are:
1) The offer price of 70c is not sweet enough, it is below NAV(74c). Granted 2 of their malls are still under development, one opening next month, however these malls are served by excellent transport links & have potential to generate good income.
2) The offer is not in cash but a share swap with no plan B for those not for the proposal. Is the new entity share price over inflated which makes it a lose-lose situation for minority shareholders?
3) The china malls are being taken over at 25% discount to their valuation, this on top of the already discounted offer price of 70c, head thet win, tail you lose dilemma?
4) The new entity will venture into Myanmar, a new frontier market, read high risk venture?
Would be nice to hear your views?

Part 1 - Share swap deal
% of PCRT stakes by PREH + Vendor = 26,699,219 (2.33%) +299,143,763 (26.11%) =325,842,928 Units (28.44%)
Value of 28.44% PCRT at $0.70 RTO by St James = $228,090.049.60
Number of shares issued by St James at factor of 0.5954 = 325,842,928 x 0.5954 = 194,006,879 new St James shares
Value of new St James shares worth at $1.1756 = 194,006,879 x $1.1756 = $228,074,487

Part 2 - valuation
St James current per share valuation after conso 50-1 = $0.054 x 50 = $2.70
If PCRT price at $0.70,

Given all pieces of information, PCRT shareholders seem to be getting a good deal.. IMO, the biggest loser may seem to be minority shareholder of St James given their share consolidation value at $2.70 vs issued of new price $1.1756. (however in any RTO, anything is possible and may trade higher than 5.4 cents). For PCRT share price movement it should track st james closely and vice versa.

Welcome any views.

PCRT SP Factor Con SJ SP SJ SP Ratio
$1.846 0.5954 $3.10 0.062 50000
$1.816 0.5954 $3.05 0.061 50000
$1.786 0.5954 $3.00 0.06 50000
$1.756 0.5954 $2.95 0.059 50000
$1.727 0.5954 $2.90 0.058 50000
$1.697 0.5954 $2.85 0.057 50000
$1.667 0.5954 $2.80 0.056 50000
$1.637 0.5954 $2.75 0.055 50000
$1.608 0.5954 $2.70 0.054 50000
$1.578 0.5954 $2.65 0.053 50000
$1.548 0.5954 $2.60 0.052 50000
$1.518 0.5954 $2.55 0.051 50000
$1.489 0.5954 $2.50 0.05 50000
$1.459 0.5954 $2.45 0.049 50000
$1.429 0.5954 $2.40 0.048 50000
$1.399 0.5954 $2.35 0.047 50000
$1.369 0.5954 $2.30 0.046 50000
$1.340 0.5954 $2.25 0.045 50000
$1.310 0.5954 $2.20 0.044 50000
$1.280 0.5954 $2.15 0.043 50000
$1.250 0.5954 $2.10 0.042 50000
$1.221 0.5954 $2.05 0.041 50000
$1.191 0.5954 $2.00 0.04 50000
$1.161 0.5954 $1.95 0.039 50000
$1.131 0.5954 $1.90 0.038 50000
$1.101 0.5954 $1.85 0.037 50000
$1.072 0.5954 $1.80 0.036 50000
$1.042 0.5954 $1.75 0.035 50000
$1.012 0.5954 $1.70 0.034 50000
$0.982 0.5954 $1.65 0.033 50000
$0.953 0.5954 $1.60 0.032 50000
$0.923 0.5954 $1.55 0.031 50000
$0.893 0.5954 $1.50 0.03 50000
$0.863 0.5954 $1.45 0.029 50000
$0.834 0.5954 $1.40 0.028 50000
$0.804 0.5954 $1.35 0.027 50000
$0.774 0.5954 $1.30 0.026 50000
$0.744 0.5954 $1.25 0.025 50000
$0.714 0.5954 $1.20 0.024 50000
$0.685 0.5954 $1.15 0.023 50000
$0.655 0.5954 $1.10 0.022 50000
$0.625 0.5954 $1.05 0.021 50000
$0.595 0.5954 $1.00 0.02 50000
$0.70 0.5954 $1.176 $0.024 50000 - Benchmark.

Placement of 52m St james share at $0.0267 to ron sim, and $1.3353 after share consolidation.. factor has also change to 0.5242. In anyway, the game plan for the big boys may now seem to be st james rather than PCRT.

As per this morning annc, I thot the placement share issue to Ron Sim cancelled....

BTW there is no EGM at PCRT side. PCRT can only take or reject the offer.

Only EGM at St James. Which is confirmed passed as there are
irrevoccable undertaking given by substantial shareholders holding >50.1% to approve this deal,
So it is done deal.

So Basically the formula if anyone is looking to peg PCRT shares to St James is as follows:

PCRT = St James X 0.5242

If anyone want to play safe then the fair value of St James will then be the considerations.

Vested PCRT
GG

then why are folks still selling PCRT???