SHC Capital Asia

Anyone vested in this? Pending disposal of the SHC insurance business for approximately $112 million. NTA is estimated to rise from 17.40 to 37.27cts a share post disposal and EPS to rise from 2.42 to 24.30cts.

Board also intends to distribute at least 30pct of the proceeds in the form of special dividends to share holders. Board has also obtained approval for continued trading post disposal. Now trading at 30.5cts.

Business track record seems fairly stable to me over the last 3 years, only barring the risk of the disposal of the insurance business falling through.

<Vested>

Proposed Option Redemption looks so fishy. Why should option holders get full value when the shares are trading at discount?

Outstanding option: 31,972,000
Weighted average exercise price: 11.12ct

[(31,972,000 x $0.1112) + $8.4m] / 31,972,000 = $0.374

Correct me if I'm wrong.

Haha I dont understand why would it look fishy? Essentially the company would just be pure cash worth 37c per share. Something like the case of Elite KSB back then when they did the same thing. Now it would just be for shareholders to wait for the share price to reflect this true value? Currently still depressed probably cause investors are waiting to see if the deal really goes through.

(vested)

Wont these deduct from the post disposal NTA?

(d) S$8.4 million being the Assumed Options Redemption Consideration;

(e) S$477,000 being the maximum amount of the Proposed Directors’ Fees in respect of
FY2014;

(f) S$600,000 being the aggregate remuneration payable to the Project Committee
(including the Proposed Project Directors’ Fees); and

(g) S$3.5 million being the estimated costs and expenses incurred in connection with the
Proposed Disposal.

(01-07-2014, 10:44 AM)heifien91 Wrote: Haha I dont understand why would it look fishy? Essentially the company would just be pure cash worth 37c per share. Something like the case of Elite KSB back then when they did the same thing. Now it would just be for shareholders to wait for the share price to reflect this true value? Currently still depressed probably cause investors are waiting to see if the deal really goes through.

(vested)

Shareholders to wait? For how long? Why option holders don't have to wait? If shareholders wait, how much can they get back? The full $0.374 just like the option holders? Why not let the option holders exercise the options and hold shares like every other shareholders? Like that more fair right?

The shares ain't trading at that much a discount, if u factor in the transaction costs as chew mentioned. This company hasn't been too upfront about the costs until this morning:

Number of shares: 303.98m
NAV on completion (37.27c): $113.29m

Expenses:
a. FY13 Dividend (paid) = ($0.851m)
b. Transfer amount = ($1.025m)
c. Retention bonus = ($0.948m)
d. Options redemption = ($8.4m)
e. Proposed Dir Fees = ($0.477m)
f. Remuner of proj committee = ($0.6m)
g. Misc cost = ($3.5m)

Net = $97.49m
Per sh = $0.32 (out of which 4c is locked under "Demand Guarantee")

cif5000 is right that the option redemption is excessive. Seems like insiders are helping themselves to the kitty first.

Hi all,

The current management are seasoned industry veterans who came over to SHC between 2006-2008. In about 7-8 years, the company turned from losses to profits, revenue and profits have tripled and with the current disposal, NAV has quadrupled. The options were given as part of the package to compensate them for the career risk of jumping to SHC which was pretty close to a start up.

I think that allowing them to cash out their options at full value is fair because this ties directly to the value of the insurance business that they built up. Can you imagine building a business for your boss who in the end says he will slice 20% off your compensation because it is "unfair" to shareholders? In the first place, the agreement was to build the business from scratch. The management have done this and delivered extraordinarily well IMO.

Asking the management to convert the options to shares is unfair to them because they will not be employees anymore. They will not be able to control the outcome of the cash company and have no incentive to hold shares.

Just my 0.02.

(01-07-2014, 11:45 AM)grubb Wrote: Hi all,

The current management are seasoned industry veterans who came over to SHC between 2006-2008. In about 7-8 years, the company turned from losses to profits, revenue and profits have tripled and with the current disposal, NAV has quadrupled. The options were given as part of the package to compensate them for the career risk of jumping to SHC which was pretty close to a start up.

I think that allowing them to cash out their options at full value is fair because this ties directly to the value of the insurance business that they built up. Can you imagine building a business for your boss who in the end says he will slice 20% off your compensation because it is "unfair" to shareholders? In the first place, the agreement was to build the business from scratch. The management have done this and delivered extraordinarily well IMO.

Asking the management to convert the options to shares is unfair to them because they will not be employees anymore. They will not be able to control the outcome of the cash company and have no incentive to hold shares.

Just my 0.02.

Share options if redeemed should be done at market price. Otherwise, call it something else. Call it a super bonus, I won't care.

Did they build the insurance business from scratch? Nanyang Insurance been around for a long time.
Got old pictures on their website.

(01-07-2014, 02:17 PM)opmi Wrote: Did they build the insurance business from scratch? Nanyang Insurance been around for a long time.
Got old pictures on their website.

Hi opmi,

You are right. It is not from scratch because SHC was previously named Nanyang Insurance. The restructuring was in 2004 and the current management came on board in 2006-2008. My apologies.