Best World

[weijian]

Wow! This company now has cash (608mil sgd) that is more than its total equity, or 80% of its market capitalization. Its end FY23 balance sheet also shows that it was negative working capital (inventories + receivables - payables) = 63 + 10 - 138 = -65mil. So there is a high probability that the more it scales, the more negative working capital!

Since it isn't paying out any of its cash as dividends, It must be loading its elephant gun for a takeover target in the near future. Its competitor, Nu Skin has a current market capitalization of ~600mil USD. How about a change from competitor to sister?

21. Dividend
In view of the Group's short and medium term commitment which include but are not limited to, working capital requirements and corporate actions capital needs, as well as taking into consideration the uncertain business climate explained further in Section 4 of Other Information, no dividends have been declared/recommended by the Board for the financial year ended 31 December 2023

BW FY23 results:
https://links.sgx.com/FileOpen/2024%2002...eID=790028

Wow! zero penny was dished out as dividend because of all the uncertainty and working capital requirements. I thought it was a prudent move on their part, to conserve cash to stock up more DR Secret lotion in view of the chances of world wars and earthquakes. After all, moon eclipses are indicating that more calamities are around the corner! And every lady needs facial cream to recover from the calamities!

And now just slightly more than 1 month, our co-chairwoman has decided that it is entirely prudent to use more than 60% of the company's cash as of 31st Dec 2023!

Did SGX RegCo's rule changes help? Or it is simply a case of paying a price to get rid of your pesky boyfriend? Or both?

PROPOSED SELECTIVE CAPITAL REDUCTION

The Company proposes to cancel all of the 150,147,893 Shares held by the Eligible Shareholders in consideration for S$2.50 in cash per Share by way of the Selective Capital Reduction. Accordingly, an aggregate sum of S$375,369,733 arising from the Selective Capital Reduction, if effected, will be returned to the Eligible Shareholders in cash, on the basis of S$2.50 for each Share held by each Eligible Shareholder that is cancelled as a result of the Selective Capital Reduction.

https://links.sgx.com/FileOpen/2024%2004...eID=794527

[ghchua]

Hi weijian,

21. Dividend
In view of the Group's short and medium term commitment which include but are not limited to, working capital requirements and corporate actions capital needs, as well as taking into consideration the uncertain business climate explained further in Section 4 of Other Information, no dividends have been declared/recommended by the Board for the financial year ended 31 December 2023

I don't see any deviation on their reasons for withholding dividends. Selective capital reduction is a form of corporate action, and they have indicated that it is one of the reasons for not paying dividends.

[dreamybear]

Wow! zero penny was dished out as dividend because of all the uncertainty and working capital requirements. I thought it was a prudent move on their part, to conserve cash to stock up more DR Secret lotion in view of the chances of world wars and earthquakes. After all, moon eclipses are indicating that more calamities are around the corner! And every lady needs facial cream to recover from the calamities!

And now just slightly more than 1 month, our co-chairwoman has decided that it is entirely prudent to use more than 60% of the company's cash as of 31st Dec 2023!

Did SGX RegCo's rule changes help? Or it is simply a case of paying a price to get rid of your pesky boyfriend? Or both?

PROPOSED SELECTIVE CAPITAL REDUCTION

The Company proposes to cancel all of the 150,147,893 Shares held by the Eligible Shareholders in consideration for S$2.50 in cash per Share by way of the Selective Capital Reduction. Accordingly, an aggregate sum of S$375,369,733 arising from the Selective Capital Reduction, if effected, will be returned to the Eligible Shareholders in cash, on the basis of S$2.50 for each Share held by each Eligible Shareholder that is cancelled as a result of the Selective Capital Reduction.

https://links.sgx.com/FileOpen/2024%2004...eID=794527

Is delisting after trading resumption really a surprise ? 

Only the decision makers wld know, but based on announcements, there seems to be some interesting information  : 

The announcement below references 2 past announcements relating to delisting. Does it suggest BW continued to keep the option open since ?
https://links.sgx.com/FileOpen/2024%2003...eID=792902
"The Board of Directors (“Directors” or “Board”) of Best World International Limited (“Company”) refers to the Company’s announcements released on 9 July 2022 and 11 November 2021 in relation to the Company exploring options for a delisting exercise.....

3.1 an exit offer must be made to the Company’s Shareholders and holders of any other classes of listed securities to be delisted. The exit offer must be (a) fair and reasonable...."

From the following announcement, it seems market trading is required to establish a fair value.
https://links.sgx.com/FileOpen/7%20April...eID=709263
"(ii) The last share buyback price was SGD 1.36 per share. Is this the implied fair value per share of the company? 
(ii) To establish an independent view of the fair value per share, an Independent Financial Adviser (“IFA”) would need to be appointed. This would be an expensive and time-consuming process and we are guided that, in the absence of a trading market for the shares for a long period of time, it would be challenging to establish the fair market value per share... "

A further intellectual exercise might be to reference a sample IFA circular and reverse engineer the necessary conditions required for a fair and reasonable offer. 

So are there moon eclipses, a three-body problem or are the stars finally aligned ?

[ghchua]

"(ii) The last share buyback price was SGD 1.36 per share. Is this the implied fair value per share of the company? 
(ii) To establish an independent view of the fair value per share, an Independent Financial Adviser (“IFA”) would need to be appointed. This would be an expensive and time-consuming process and we are guided that, in the absence of a trading market for the shares for a long period of time, it would be challenging to establish the fair market value per share... "

Hi dreamybear,

EAO or share buyback is not a delisting or takeover offer, so whether it is fair or not is really a decision that is up to individual shareholders to make.

Some shareholders might feel that the price offered is not fair, but it is reasonable for them to take up the EAO as the share had been suspended for so long with no dividend payout, and the opportunity cost is too high to keep on holding onto it. Some might feel that they can wait, but meanwhile they need some liquidity and so they accept some of their shares and keep the rest. Some might wish to hold on and so decided not to take up the EAO.

There is no right or wrong answers here. And when the shares resume trading after suspension, shareholders who have accepted the EAO previously can still buy more shares or sell some in the market if they decided to change their view.

[Shiyi]

"(ii) The last share buyback price was SGD 1.36 per share. Is this the implied fair value per share of the company? 
(ii) To establish an independent view of the fair value per share, an Independent Financial Adviser (“IFA”) would need to be appointed. This would be an expensive and time-consuming process and we are guided that, in the absence of a trading market for the shares for a long period of time, it would be challenging to establish the fair market value per share... "

Hi dreamybear,

EAO or share buyback is not a delisting or takeover offer, so whether it is fair or not is really a decision that is up to individual shareholders to make.

Some shareholders might feel that the price offered is not fair, but it is reasonable for them to take up the EAO as the share had been suspended for so long with no dividend payout, and the opportunity cost is too high to keep on holding onto it. Some might feel that they can wait, but meanwhile they need some liquidity and so they accept some of their shares and keep the rest. Some might wish to hold on and so decided not to take up the EAO.

There is no right or wrong answers here. And when the shares resume trading after suspension, shareholders who have accepted the EAO previously can still buy more shares or sell some in the market if they decided to change their view.

Latest annual report released yesterday shows that the two co-founders were still each paid more than $10 million in FY2023, despite the uproar from minority shareholders and Prof Mak.

[dreamybear]

The AGM date is out while the delisting circular(date of EGM) is not. According to the previous announcement, it seems SGX-ST approval is required for the circular.
https://links.sgx.com/FileOpen/2024%2003...eID=792902
"Approvals Required. The SCR will be subject to various procedures and approvals, including approval by the SGX-ST of the circular to Shareholders for the convening of the EGM in relation to the SCR, approval of the SCR by the Shareholders at the EGM, and the approval of the SCR by the Court, and therefore the SCR may or may not materialise."

Will this be the last BW AGM ?  What will be shareholders' questions in the AGM ? What will be the voting percentages for the directors seeking re-election ?

Will the Requisitioning Members re-appear and table resolutions for AGM ?

------------

Meanwhile, Prof Mak has written yet another article on BW.

BEST WORLD: UGLY TIME FOR MINORITY SHAREHOLDERS
https://governanceforstakeholders.com/20...reholders/