CapitaMalls Asia

(16-04-2014, 12:15 AM)Ferns Wrote: Hi, I'm new to investing.

Have a question regarding this privatisation. What happens to shareholders who refuse to sell their shares when it is delisted?

My inference from what lonewolf posted earlier is that once 90% is hit, the remaining 10% must sell.

Edit: I did a quick read up after this post. Investopedia and a few other sources answer this. You continue to hold on the shares but trading it becomes OTC or pink sheet (which is something I don't understand yet)

Delisted C.K. Tang dangles fresh carrot

INVESTORS who refused to sell their stock when retailer C.K. Tang delisted two years ago now have a far better offer to tempt them to part with their shares.

Often such minority shareholders of delisted firms are left with stock they cannot unload for love nor money, while being unable to share in the spoils of a firm’s profits. But C.K. Tang, famed for its Orchard Road department store Tangs, will pay the 470 or so investors $1.30 per share – 56.6 per cent up on the 2009 exit offer of 83 cents. Those investors hold about 1.8 per cent or 4.38 million shares, so the buyout will cost the firm about $5.69 million.

C.K. Tang said it initiated the move because some shareholders who missed the deadline for the 2009 buyout have come knocking on its door to sell their shares. And as there are still stockholders, the firm must maintain the shareholder registry and hold annual general meetings. Chief executive Foo Tiang Sooi said: ‘(We) try to reduce this administrative burden of ours so we can focus on our retail business.

C.K. Tang’s new offer will be via a selective capital reduction exercise. This involves using company funds to pay for the shares, which will then be cancelled. This will lower the firm’s capital base. The measure will go ahead if 75 per cent of the minority shareholdings represented at an extraordinary general meeting on Sept 15 vote in favour. Even dissenting investors will then have their shares cancelled and the value paid out. This exercise is technically different from the original delisting offer. Then, an investment vehicle run by majority shareholders Tang Wee Sung and younger brother Tang Wee Kit offered cash direct to minority investors for their stock.

After the August 2009 delisting, the controlling shareholders held about 97.8 per cent of C.K. Tang. Some of the remaining small investors later sold their shares, giving the Tang brothers 98.2 per cent of the firm. The new offer of $1.30 a share looks generous. As of March 31, C.K. Tang’s net asset value per share was $1.02, up on the 93 cents two years ago, thanks to its performance and changes to its property’s valuation. Its financial adviser, PricewaterhouseCoopers, has given the shares a fair market value of $1.13, and the $1.30 offer is 15 per cent above that.

‘With the exercise, the minority shareholders will have an opportunity to realise the value of their shares at an attractive premium,’ said Mr Foo. He said the $1.30 deal is so much higher than the delisting price because market conditions affect how offers are determined at any given point. ‘You’ll have people accepting, you’ll have people not accepting. At that point in time, whoever accepted it agreed to the price. Those who did not, did not, for whatever reason,’ he added. ‘So, at this point in time, all we do is to put what we believe to be our best foot forward. It’s a win-win situation for everybody. As far as we are concerned, there is no hidden agenda.’

C.K. Tang has confirmed that there are no plans to redevelop the Orchard Road property in the foreseeable future. At the delisting, some shareholders had been worried that the firm could cash in by redeveloping the prime real estate after buying them out.

jonkwok@sph.com.sg
Source: The Straits Times © Singapore Press Holdings Ltd.

For delisted shares, you don't have to force-sell if you don't agree on the price offered by the company. There will still be AGMs for you to attend to and the company will have to spend money on administrative matters to update the shareholder registry. And you get the chance to own the share certificate!

Offhand, I can think of the privatisation of CK Tang. It is an interesting story for OPMI of CMA to take note of. The minority shareholders of this delisted firm managed to get an offer, albeit 2 years later, at $1.30/share with RNAV at $1.13 at NAV at $1.02. Bear in mind 2 years back before the offer, the company was taken private below book value at 83c, with NAV at 93c.

With RNAV of CMA est. by JPMorgan at $2.95, i do not think minority shareholders of CMA is being offered a fair deal to to tender their shares at 33% discount to RNAV. Moreover CMA IPOed at 1.5x book value but now they are privatising at 1.2x BV!

One question, who are the institutional/big shareholders of CMA? I only see Heng Siew Eng in the top 20 list holding 0.10% of the outstanding shares in CMA. The rest are in nominees' accounts.

People usually confuse between delisting which is under SGX rules, and acquisition rules which is under Companies Act.

Let's look at CK Tang which was actually a pretty unique case.

When major shareholders reach 90% of o/s shares, they have the RIGHT ie call option to commence compulsory acquisition. However for some strange reason CK Tang did not exercise that right but choose to hold AGMs and lim kopi every year with their old shareholders. Not difficult to understand the conspiracy theory that those who didn't tender were close to the Tangs and keep the 50% upside

But generally, it is quite difficult to be OPMI in an unlisted entity, unless of course you regularly lim kopi with the major shareholder.

IIRC our share scriptless scheme is under immobilisation method. That means you can go SGX and ask for the share cert (for a fee) of the company you own. Just make sure you update the company secretariat when there is corporate actions

(16-04-2014, 12:31 PM)specuvestor Wrote: People usually confuse between delisting which is under SGX rules, and acquisition rules which is under Companies Act.

Let's look at CK Tang which was actually a pretty unique case.

When major shareholders reach 90% of o/s shares, they have the RIGHT ie call option to commence compulsory acquisition. However for some strange reason CK Tang did not exercise that right but choose to hold AGMs and lim kopi every year with their old shareholders. Not difficult to understand the conspiracy theory that those who didn't tender were close to the Tangs and keep the 50% upside

But generally, it is quite difficult to be OPMI in an unlisted entity, unless of course you regularly lim kopi with the major shareholder.

IIRC our share scriptless scheme is under immobilisation method. That means you can go SGX and ask for the share cert (for a fee) of the company you own. Just make sure you update the company secretariat when there is corporate actions

i see!
Lucky for those who mixed with the "lim kopi" group of people. But really must be distant relatives or very closed friends. OPMI like us just have to live with it lol.

(16-04-2014, 12:31 PM)specuvestor Wrote: Let's look at CK Tang which was actually a pretty unique case.

When major shareholders reach 90% of o/s shares, they have the RIGHT ie call option to commence compulsory acquisition. However for some strange reason CK Tang did not exercise that right but choose to hold AGMs and lim kopi every year with their old shareholders.

http://www.valuebuddies.com/thread-1057-...l#pid61412

(16-04-2014, 01:46 PM)cif5000 Wrote:

(16-04-2014, 12:31 PM)specuvestor Wrote: Let's look at CK Tang which was actually a pretty unique case.

When major shareholders reach 90% of o/s shares, they have the RIGHT ie call option to commence compulsory acquisition. However for some strange reason CK Tang did not exercise that right but choose to hold AGMs and lim kopi every year with their old shareholders.

http://www.valuebuddies.com/thread-1057-...l#pid61412

Well done. Now we know why CT Tang didn't exercise the right.

(16-04-2014, 01:23 AM)yawnyawn Wrote:

(16-04-2014, 12:15 AM)Ferns Wrote: Hi, I'm new to investing.

Have a question regarding this privatisation. What happens to shareholders who refuse to sell their shares when it is delisted?

My inference from what lonewolf posted earlier is that once 90% is hit, the remaining 10% must sell.

Edit: I did a quick read up after this post. Investopedia and a few other sources answer this. You continue to hold on the shares but trading it becomes OTC or pink sheet (which is something I don't understand yet)

Delisted C.K. Tang dangles fresh carrot

INVESTORS who refused to sell their stock when retailer C.K. Tang delisted two years ago now have a far better offer to tempt them to part with their shares.

Often such minority shareholders of delisted firms are left with stock they cannot unload for love nor money, while being unable to share in the spoils of a firm’s profits. But C.K. Tang, famed for its Orchard Road department store Tangs, will pay the 470 or so investors $1.30 per share – 56.6 per cent up on the 2009 exit offer of 83 cents. Those investors hold about 1.8 per cent or 4.38 million shares, so the buyout will cost the firm about $5.69 million.

C.K. Tang said it initiated the move because some shareholders who missed the deadline for the 2009 buyout have come knocking on its door to sell their shares. And as there are still stockholders, the firm must maintain the shareholder registry and hold annual general meetings. Chief executive Foo Tiang Sooi said: ‘(We) try to reduce this administrative burden of ours so we can focus on our retail business.

C.K. Tang’s new offer will be via a selective capital reduction exercise. This involves using company funds to pay for the shares, which will then be cancelled. This will lower the firm’s capital base. The measure will go ahead if 75 per cent of the minority shareholdings represented at an extraordinary general meeting on Sept 15 vote in favour. Even dissenting investors will then have their shares cancelled and the value paid out. This exercise is technically different from the original delisting offer. Then, an investment vehicle run by majority shareholders Tang Wee Sung and younger brother Tang Wee Kit offered cash direct to minority investors for their stock.

After the August 2009 delisting, the controlling shareholders held about 97.8 per cent of C.K. Tang. Some of the remaining small investors later sold their shares, giving the Tang brothers 98.2 per cent of the firm. The new offer of $1.30 a share looks generous. As of March 31, C.K. Tang’s net asset value per share was $1.02, up on the 93 cents two years ago, thanks to its performance and changes to its property’s valuation. Its financial adviser, PricewaterhouseCoopers, has given the shares a fair market value of $1.13, and the $1.30 offer is 15 per cent above that.

‘With the exercise, the minority shareholders will have an opportunity to realise the value of their shares at an attractive premium,’ said Mr Foo. He said the $1.30 deal is so much higher than the delisting price because market conditions affect how offers are determined at any given point. ‘You’ll have people accepting, you’ll have people not accepting. At that point in time, whoever accepted it agreed to the price. Those who did not, did not, for whatever reason,’ he added. ‘So, at this point in time, all we do is to put what we believe to be our best foot forward. It’s a win-win situation for everybody. As far as we are concerned, there is no hidden agenda.’

C.K. Tang has confirmed that there are no plans to redevelop the Orchard Road property in the foreseeable future. At the delisting, some shareholders had been worried that the firm could cash in by redeveloping the prime real estate after buying them out.

jonkwok@sph.com.sg
Source: The Straits Times © Singapore Press Holdings Ltd.

For delisted shares, you don't have to force-sell if you don't agree on the price offered by the company. There will still be AGMs for you to attend to and the company will have to spend money on administrative matters to update the shareholder registry. And you get the chance to own the share certificate!

Offhand, I can think of the privatisation of CK Tang. It is an interesting story for OPMI of CMA to take note of. The minority shareholders of this delisted firm managed to get an offer, albeit 2 years later, at $1.30/share with RNAV at $1.13 at NAV at $1.02. Bear in mind 2 years back before the offer, the company was taken private below book value at 83c, with NAV at 93c.

With RNAV of CMA est. by JPMorgan at $2.95, i do not think minority shareholders of CMA is being offered a fair deal to to tender their shares at 33% discount to RNAV. Moreover CMA IPOed at 1.5x book value but now they are privatising at 1.2x BV!

One question, who are the institutional/big shareholders of CMA? I only see Heng Siew Eng in the top 20 list holding 0.10% of the outstanding shares in CMA. The rest are in nominees' accounts.

Why surrender your hard won CMA shares at a discount to CAPL when it's definitely worth >$2.22 if you hang onto it. If minority don't vote for it, I'm sure a sweeter deal is possible as the benefits to CAPL justify it.

Actually, compulsory acquisition works both way. The offeror can exercise the right to compulsory acquire minority shareholders shares when the offeror hold more than 90%. However, minority shareholders can exercise their rights to require the offeror to acquire their share at the offer price what that happen.

(16-04-2014, 12:31 PM)specuvestor Wrote: When major shareholders reach 90% of o/s shares, they have the RIGHT ie call option to commence compulsory acquisition. However for some strange reason CK Tang did not exercise that right but choose to hold AGMs and lim kopi every year with their old shareholders.

There is no strange reason for CK Tang case. If you all remember, they used a partnership vehicle, Tang Unity TWO LLP (if I remember correctly) to acquire CK Tang shares. Compulsory acquisition rule under Companies Act does not apply in this case since they are not using a company to acquire CK Tang shares. Therefore, they cannot compulsory acquire all the remaining shares out there from non-accepting shareholders.

Similarly, if I use my personal name to make an offer for a company for all its outstanding shares out there, Companies Act does not apply for me and therefore compulsory acquisition rule does not apply even if I hold 90% of the shares at the close of the offer.

Hope that the above clarifies.

(16-04-2014, 04:51 PM)MINX Wrote:

(16-04-2014, 01:23 AM)yawnyawn Wrote:

(16-04-2014, 12:15 AM)Ferns Wrote: Hi, I'm new to investing.

Have a question regarding this privatisation. What happens to shareholders who refuse to sell their shares when it is delisted?

My inference from what lonewolf posted earlier is that once 90% is hit, the remaining 10% must sell.

Edit: I did a quick read up after this post. Investopedia and a few other sources answer this. You continue to hold on the shares but trading it becomes OTC or pink sheet (which is something I don't understand yet)

Delisted C.K. Tang dangles fresh carrot

INVESTORS who refused to sell their stock when retailer C.K. Tang delisted two years ago now have a far better offer to tempt them to part with their shares.

Often such minority shareholders of delisted firms are left with stock they cannot unload for love nor money, while being unable to share in the spoils of a firm’s profits. But C.K. Tang, famed for its Orchard Road department store Tangs, will pay the 470 or so investors $1.30 per share – 56.6 per cent up on the 2009 exit offer of 83 cents. Those investors hold about 1.8 per cent or 4.38 million shares, so the buyout will cost the firm about $5.69 million.

C.K. Tang said it initiated the move because some shareholders who missed the deadline for the 2009 buyout have come knocking on its door to sell their shares. And as there are still stockholders, the firm must maintain the shareholder registry and hold annual general meetings. Chief executive Foo Tiang Sooi said: ‘(We) try to reduce this administrative burden of ours so we can focus on our retail business.

C.K. Tang’s new offer will be via a selective capital reduction exercise. This involves using company funds to pay for the shares, which will then be cancelled. This will lower the firm’s capital base. The measure will go ahead if 75 per cent of the minority shareholdings represented at an extraordinary general meeting on Sept 15 vote in favour. Even dissenting investors will then have their shares cancelled and the value paid out. This exercise is technically different from the original delisting offer. Then, an investment vehicle run by majority shareholders Tang Wee Sung and younger brother Tang Wee Kit offered cash direct to minority investors for their stock.

After the August 2009 delisting, the controlling shareholders held about 97.8 per cent of C.K. Tang. Some of the remaining small investors later sold their shares, giving the Tang brothers 98.2 per cent of the firm. The new offer of $1.30 a share looks generous. As of March 31, C.K. Tang’s net asset value per share was $1.02, up on the 93 cents two years ago, thanks to its performance and changes to its property’s valuation. Its financial adviser, PricewaterhouseCoopers, has given the shares a fair market value of $1.13, and the $1.30 offer is 15 per cent above that.

‘With the exercise, the minority shareholders will have an opportunity to realise the value of their shares at an attractive premium,’ said Mr Foo. He said the $1.30 deal is so much higher than the delisting price because market conditions affect how offers are determined at any given point. ‘You’ll have people accepting, you’ll have people not accepting. At that point in time, whoever accepted it agreed to the price. Those who did not, did not, for whatever reason,’ he added. ‘So, at this point in time, all we do is to put what we believe to be our best foot forward. It’s a win-win situation for everybody. As far as we are concerned, there is no hidden agenda.’

C.K. Tang has confirmed that there are no plans to redevelop the Orchard Road property in the foreseeable future. At the delisting, some shareholders had been worried that the firm could cash in by redeveloping the prime real estate after buying them out.

jonkwok@sph.com.sg
Source: The Straits Times © Singapore Press Holdings Ltd.

For delisted shares, you don't have to force-sell if you don't agree on the price offered by the company. There will still be AGMs for you to attend to and the company will have to spend money on administrative matters to update the shareholder registry. And you get the chance to own the share certificate!

Offhand, I can think of the privatisation of CK Tang. It is an interesting story for OPMI of CMA to take note of. The minority shareholders of this delisted firm managed to get an offer, albeit 2 years later, at $1.30/share with RNAV at $1.13 at NAV at $1.02. Bear in mind 2 years back before the offer, the company was taken private below book value at 83c, with NAV at 93c.

With RNAV of CMA est. by JPMorgan at $2.95, i do not think minority shareholders of CMA is being offered a fair deal to to tender their shares at 33% discount to RNAV. Moreover CMA IPOed at 1.5x book value but now they are privatising at 1.2x BV!

One question, who are the institutional/big shareholders of CMA? I only see Heng Siew Eng in the top 20 list holding 0.10% of the outstanding shares in CMA. The rest are in nominees' accounts.

Why surrender your hard won CMA shares at a discount to CAPL when it's definitely worth >$2.22 if you hang onto it. If minority don't vote for it, I'm sure a sweeter deal is possible as the benefits to CAPL justify it.

I agree with it. I believe there would be people raising it in their AGM tmr. I am of the opinion that the offer price is too low.

(16-04-2014, 01:46 PM)cif5000 Wrote:

(16-04-2014, 12:31 PM)specuvestor Wrote: Let's look at CK Tang which was actually a pretty unique case.

When major shareholders reach 90% of o/s shares, they have the RIGHT ie call option to commence compulsory acquisition. However for some strange reason CK Tang did not exercise that right but choose to hold AGMs and lim kopi every year with their old shareholders.

http://www.valuebuddies.com/thread-1057-...l#pid61412

(16-04-2014, 05:47 PM)ghchua Wrote: There is no strange reason for CK Tang case. If you all remember, they used a partnership vehicle, Tang Unity TWO LLP (if I remember correctly) to acquire CK Tang shares. Compulsory acquisition rule under Companies Act does not apply in this case since they are not using a company to acquire CK Tang shares. Therefore, they cannot compulsory acquire all the remaining shares out there from non-accepting shareholders.

Similarly, if I use my personal name to make an offer for a company for all its outstanding shares out there, Companies Act does not apply for me and therefore compulsory acquisition rule does not apply even if I hold 90% of the shares at the close of the offer.

Hope that the above clarifies.

Understand that's the official reason. So the simple question is why don't they use a company vehicle to take over? I would hardly think it is a slip. See how other GO is done by using new entity. Similarly Tang UnityThree LLP is a "new" entity. UIC is not using a 3rd party vehicle to GO SL because they were trying to catch Silchester on the SGX free float rule, not Companies Act.

Thanks for clarifying and please correct me if I am mistaken.

BTW I am not expressing any opinion on CMA, just a comment on the technicality since it was brought up and discussed

(16-04-2014, 05:20 PM)oys-ter Wrote: Actually, compulsory acquisition works both way. The offeror can exercise the right to compulsory acquire minority shareholders shares when the offeror hold more than 90%. However, minority shareholders can exercise their rights to require the offeror to acquire their share at the offer price what that happen.

Good point but I can't remember this technicality exist in Singapore or elsewhere but my friend tells me Caymen rules are different due to different Companies Act. So we do have to be careful of the domicile of the takeover vehicle, or even the listed entity.