Best World

[ghchua]

No details are given on the exit offer price. Nor are the identity of the requisitioning members. So much for the corporate governance and transparency.

Hi Shiyi,

I am sure you have encountered cases on SGX, whereby companies came out to announce a possibility of a general offer without saying any offer price, after its share price had suddenly spiked up. Therefore, in this case, what they are saying is that they have decided on selective capital reduction as a delisting exercise. I guess details will be available later.

They have said they are seeking legal advice on the requisition. So, I think more details will be available later.

[ghchua]

If the selective capital reduction delisting exercise requires conditions such as 75% approval of eligible, offer to be fair and reasonable, etc, is it easier/more likely to go thru' as compared to using Voluntary Cash Offer(VO) route ?

Why not VO or other strategies ?

Hi dreamybear,

I don't think VGO is easier to go through now. Previously, many issuers used VGO because they can create a shell company to make the offer, bypassing the independent shareholders rule for acceptance level. Now that the rule had been fixed, it means that the major shareholders do not count towards the acceptance level. And VGO needs 90% acceptance level for compulsory acquisition, certainly a higher benchmark than selective capital reduction (SCR).

For the other strategies like Scheme of Arrangement (SOR), it requires the offeror to fork out money to take out minorities. Also, SOR has another headcount condition besides 75%, so it makes the outcome more unpredictable. Remember for SCR, it is using the company's money to cancel out minorities holdings in the company. There is no need for the majority shareholders to come out with a single cent to cancel capital.

Delisting resolution also doesn't make sense here, since the aim is to take out all minorities completely. They don't want to be in a Boustead Projects situation whereby the company had been delisted, but there are still some minorities holding onto shares of an unlisted public company.

Do take note that once SCR is approved at a EGM and approved by the court, all minorities holdings in the company will be cancelled, even for those who voted against it or didn't bother to turn up and vote.

[dreamybear]

No details are given on the exit offer price. Nor are the identity of the requisitioning members. So much for the corporate governance and transparency.

Hi Shiyi,

I am sure you have encountered cases on SGX, whereby companies came out to announce a possibility of a general offer without saying any offer price, after its share price had suddenly spiked up. Therefore, in this case, what they are saying is that they have decided on selective capital reduction as a delisting exercise. I guess details will be available later.

They have said they are seeking legal advice on the requisition. So, I think more details will be available later.

Regarding the price/details, I suppose there would be notice of EGM, Offer Circular documents, in time to come. 

But I still can't figure out - since BW announced that the intent is to provide fair and reasonable offer, wldn't the market adjust the trading prices accordingly once market opens on Mon ? In that case, wld't the IFA have to take into consideration the possibly higher trading prices for the "fair and reasonable" opinion ? 

Thanks very much ghchua for your comprehensive replies(esp different strategies part) to my post and I also deeply appreciate the pains you take to word it for easier understanding. 

I am not sure whether my understanding is correct - with regards to Section 215 of the Company's Act, the bill has gone to second reading but the Act still needs to be amended ?

https://www.acra.gov.sg/legislation/legi...)-act-2023

https://www.acra.gov.sg/docs/default-sou...0c999a.pdf

[Shiyi]

No details are given on the exit offer price. Nor are the identity of the requisitioning members. So much for the corporate governance and transparency.

Hi Shiyi,

I am sure you have encountered cases on SGX, whereby companies came out to announce a possibility of a general offer without saying any offer price, after its share price had suddenly spiked up. Therefore, in this case, what they are saying is that they have decided on selective capital reduction as a delisting exercise. I guess details will be available later.

They have said they are seeking legal advice on the requisition. So, I think more details will be available later.

Regarding the price/details, I suppose there would be notice of EGM, Offer Circular documents, in time to come. 

But I still can't figure out - since BW announced that the intent is to provide fair and reasonable offer, wldn't the market adjust the trading prices accordingly once market opens on Mon ? In that case, wld't the IFA "fair and reasonable" opinion have to take into consideration the possibly higher trading prices ? 

Thanks very much ghchua for your comprehensive replies(esp different strategies part) to my post and I also deeply appreciate the pains you take to word it for easier understanding. 

I am not sure whether my understanding is correct - with regards to Section 215 of the Company's Act, the bill has gone to second reading but the Act still needs to be amended ?

https://www.acra.gov.sg/legislation/legi...)-act-2023

https://www.acra.gov.sg/docs/default-sou...0c999a.pdf

Thank you. 
The company announcements that I come across on requisition usually come with the names of requisitionists. Some go a step further by  attaching the requisition letter. To me, this piece of info is material. Likewise, the exit offer price.

As the details are not given, the trading halt should not be lifted. Otherwise, this may give those who are close to insiders undue advantage over those who fly blind.

By the way, I think the amendment of Section 215 took effect on July 1,2023.

[ghchua]

Hi dreamybear,

Yes. As Shiyi had mentioned, the amendment of Section 215 had already took effect. That's why there is so far no VGO this year as companies will not be able to use the loophole for compulsory acquisition.

As for lifting of trading halt and whether higher trading price will affect IFA opinion, normally they will take the "clean" trading price as a benchmark. Which means, after the "holding" announcement had been made and trading resumes after that, those price movements might be considered as speculative and IFA may or may not take those into consideration in their final analysis.

Hi Shiyi,

As the company had mentioned, they have been exploring options for a delisting exercise since 2021 and made those announcements. No exit offer price had been mentioned since then and the stock is still trading to date. Therefore, undertaking it using selective capital reduction is just another additional information made in addition to previous announcements. I don't see stating the exit offer price as necessary at this time and if it is necessary, they should have done it in 2021 when they first came out and made the announcement of their intention to delist.

As for the requisition notice, they said they will be seeking legal advice. I guess we should have more details soon. However, there is nothing to stop the Requisitioning Members from disclosing their identities either through the media or informing other shareholders if they choose to do so. It doesn't mean that if the company don't disclose, they cannot disclose their identities.

[weijian]

What would constitute a fair offer with an IFA? Which agencies would be able to protect the interests of minority shareholders? SIAS has proven to be totally useless in Auric Pacific’s take private offer when I held it as a shareholder so I am having ZERO expectations of them making any contributions to protecting minority shareholders.

If SGX wants to promote investments on their exchange, it’s high time they did more on corporate governance. What Japan did seem to have helped revive an otherwise lifeless exchange.

@Squirrel,
To be fair, SIAS do not have an enforcement capabilities. And I am also not sure if their advisory capacity is enshrined anywhere for consideration/review by those who carry the regulation/enforcement. As the CG environment deteriorated over the years, SIAS have stepped up their "raising the awareness" game as well. While it is not evident, but I would like to think that SIAS did contribute directly/indirectly to incremental improvements (eg. the changes in Takeover Act, Listing rules and Companies Act) that we have learnt with VB ghchua over the years.

As the company had mentioned, they have been exploring options for a delisting exercise since 2021 and made those announcements. No exit offer price had been mentioned since then and the stock is still trading to date. Therefore, undertaking it using selective capital reduction is just another additional information made in addition to previous announcements. I don't see stating the exit offer price as necessary at this time and if it is necessary, they should have done it in 2021 when they first came out and made the announcement of their intention to delist.

@ghchua
IRCC, the delisting offer back in 2021 was in regards to BWI been in suspended for some time before that - and eventually resulted in an EAO (equal access offer) in mid 2022. After the conclusion of the EAO, the company applied for a resumption of trading, got approval (or no objection) from SGX RegCo and trading resumed before the end of 2022. They have had 1 whole year and 2 whole years respectively after the last EAO and trading resumption to detail new plans. IMHO, It comes too much of a coincidence that another delisting attempt, ie. SCR comes on the heels of an EGM requisition. From the EGM requisition, Resolution 2 is really interesting:

That the Company announces through SGXNet the recommendation of the Company’s Remuneration Committee to the Board in respect of the compensation of the executive directors of the Company (“EDs”) for FY2023 and attach to the announcement a copy of the report prepared by HRGuru for a benchmarking exercise that was completed in August 2023 in relation to the pay of the EDs comparable to the benchmarks (“HRGuru Report”). Alternatively, if the Company cannot attach the HRGuru Report because of the terms of engagement of HRGuru, the Company shall engage another reputable compensation consultant to review the executive directors’ compensation for FY2023 on terms that allow its report to be published and publish such report through SGXNet.

[dreamybear]

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

imho, BW is better in terms of financials/valuation.
https://stockanalysis.com/stocks/nus/financials/
https://investors.sgx.com/_security-types/stocks/CGN ("Financial Statements" tab)

With the cash war chest vs no. of minority shares, I think BW should be in a comfortable position for the selective capital reduction exercise.
https://links.sgx.com/FileOpen/2024%2002...eID=790028  (share capital pg26)
https://links.sgx.com/FileOpen/2024%2003...eID=792902 (major SH stake pg 1)

[weijian]

Withdrawal because Requisitioning Members have achieved their objective?

WITHDRAWAL OF REQUISITION LETTER

The Company has today, received a letter from all the Requisitioning Members informing that the requisitions made pursuant to the Requisition Letter have been withdrawn, although the Requisitioning Members have reserved their rights to issue the requisitions again in the future. Accordingly, no further action will be taken by the Company in relation to the Requisition Letter at the present time.

https://links.sgx.com/FileOpen/2024%2004...eID=794052

[Shiyi]

Withdrawal because Requisitioning Members have achieved their objective?

WITHDRAWAL OF REQUISITION LETTER

The Company has today, received a letter from all the Requisitioning Members informing that the requisitions made pursuant to the Requisition Letter have been withdrawn, although the Requisitioning Members have reserved their rights to issue the requisitions again in the future. Accordingly, no further action will be taken by the Company in relation to the Requisition Letter at the present time.

https://links.sgx.com/FileOpen/2024%2004...eID=794052

In my previous posting, I suggested that the names of the requisitioning members should be made known by the company. With this withdrawal, all the more so. 

In the interest of level-playing field, the SGX Regco should instruct the board of directors to report what has transpired in its meeting with the requisitioning members.

[dreamybear]

In my previous posting, I suggested that the names of the requisitioning members should be made known by the company. With this withdrawal, all the more so. 

In the interest of level-playing field, the SGX Regco should instruct the board of directors to report what has transpired in its meeting with the requisitioning members.

I think these are valid concerns. Did you manage to write to SGX RegCo / BW IR to clarify ? Thanks.