Best World

[header]

Happy New Year everyone.

I must say the equal access scheme is a brillant move by the founders. It enables them to test market to see if minorities will bite at a low ball price. If many willingly and they are confident to get 90% shareholdings, they will then offer at GO at $1.36. If not many willingly to see, BWL can always do anorger equal access scheme at higher price and test the shareholders again. Meanwhile, the management continues to be seen as a "saviour" to small shareholders who are stuck with their shares.

I think the root of all issue is: should SGX continues to suspend the trading of BWL?

[¯|_(ツ)_/¯]

Happy New Year, valuebuddies.

@GH - Thanks for teaching me. I learn something new today.

With you explanation, Equal Access offer for off-market purchase *must not exceed* 120% of average closing price.  Furthermore, the offer price would be adjusted based on corporate actions between the period of closing price until purchased.

That to me means that the maximum price that bwl could offer is definitely not S$2.30 but definitely near to S$1.36 - which makes perfect sense to me.

Thanks for your kind sharing and I learn a lot from you.

Gratitude.

<not vested>

[CY09]

Thanks two questions I will like to raise for shareholders to inquire with regulators or with the BOD

- $1.36 price: Is this determined between 24 Dec 2021 to 31 Dec 2021? If yes, is this right because the company is in suspension mode. I thought the point of reference will be the 5 market days prior to suspension. This would mean about $1.50

- Why did BWL not offer 120% instead of 100%. It acts as a gesture that BWL considers its shares are worth more than current prices of $1.36. A second sub point is that BWL has done share buybacks a month prior to suspension at higher price of $1.80-$2.12. With the current balance sheet being that cash rich, a 10% purchase (54,410,011) shares at $1.80 works out to be $98 million and something BWL balance sheet can afford. Why then don't do it.

Maybe we can convene a mini "COP" for the BWL BOD on this and their actions

No hypothesis will be floated during the talks, it wont be 8 hours long and clear facts will be presented for them to answer.

<In New year mode so writing in a satirical fashion with current affairs relevancy and albeit the two Co-chairwomen are grassroot leaders>

[ghchua]

Hi CY09,

- $1.36 price: Is this determined between 24 Dec 2021 to 31 Dec 2021? If yes, is this right because the company is in suspension mode. I thought the point of reference will be the 5 market days prior to suspension. This would mean about $1.50

24 Dec 2021 to 31 Dec 2021 is not considered market days for Best World since there is no transaction done as the share had been suspended. I think the rule is very clear here.

(i) “Average Closing Price” means the average of the closing market prices of the Shares over the last five (5)
Market Days on which transactions in the Shares were recorded immediately preceding the date of the Market
Purchase by the Company or, as the case may be, the date of the making of the offer (as defined below)
pursuant to the Off-Market Purchase, and deemed to be adjusted for any corporate action that occurs during
the relevant five (5) Market Day period and the date on which the purchases are made

[dreamybear]

If not many willingly to see, BWL can always do anorger equal access scheme at higher price and test the shareholders again.  

Hi header,

Not sure whether you have read my previous post #1125. Is there any motivation for them to try at a higher price ? ( Of course, as a shareholder, I would most welcome more $.   )

Take for example a scenario like this :
2021 - $1.36 buyback offer : lacklustre response from minority shareholders.
2022 - no dividends or token dividends. Try $1.36 again : response maybe a bit better since getting something is better than nothing especially after so long.
2023 - no dividends or token dividends. Try $1.36 again : response probably better/much better.
2024 - no dividends or token dividends. Try $1.36 again : response ? by now, minority will probably get the idea - better take $1.36 else get nothing again.
2025 thereafter - wait till cross 90%, G.O. $1.36

Barring unforeseen circumstances, @ a price of $1.36, it is most likely that there is no need for external funding, and the company has enough existing cash to fund this exercise even if it has to stop its China business tmr. The DS business for its other countries are sustainable. In other words, it is a super safe option for the mgmt : they get to own the company "for free"(no need to fork out own $) ?

Now, the question is the above in violation of any rules ? If not, then why not ?
If the acceptance responses are better than expected, G.O. may be initiated even sooner.

What about trading resumption ? 
The issue hasn't been resolved for 2+ years. Furthermore, based on the expertise/experiences of D2/HBC in the DS industry, the expertise/experiences of the independence directors in the area of law/regulations, if there is a good chance for trading resumption in the near future, it is unlikely for the mgmt to initiate this equal access offer at this pt in time. 

Sep 2021 : AGM Q&A Pt 11 in response to questions on resumption - Despite MOFCOM not resuming accepting licence, BW has been working with SGX on suspension issue.... explore all available options .....  https://links.sgx.com/FileOpen/2021%2009...eID=685327

Nov 2021 : Future Plans Update - BOD consider delisting.
https://links.sgx.com/FileOpen/2021%2011...eID=690473

As for the China authorities side, the filings acceptance stopped in 2018 but will it resume soon ? No one knows but given incidents like these happen now and then, the authorities may want to take a cautious approach.
https://finance.yahoo.com/news/taiwanese...00211.html

At the end of the day, I always try to think from the angle of the controlling shareholders.

[header]

Hi Bear
BWL is in the business of DS. So maintaining trust is v important for company. Being listed has its advantage in maintaining trust (transparency of financials/ corp gov, etc). That is also the reason why the company always tries to perform well financially. If BWL does not do well, it may shaken the confidence of the sales team and prospective customers. So far BWL has merely suspend dividends on the premise of uncertain environment. But it is matter of time covid will be over. Assuming it continues to be profitable and cash level continue to increase, I think it would hurt their reputation not to offer a higher GO price. So they are mindful of that.

My issue is with SGX. Does it really serve anyone good for BWL shares continues to be suspended?? I am really doubtful.

Just to declare: I have some shares in BWL. Dreamybear, do you intend to take up the offer to sell 10%?

[CY09]

Hi CY09,

- $1.36 price: Is this determined between 24 Dec 2021 to 31 Dec 2021? If yes, is this right because the company is in suspension mode. I thought the point of reference will be the 5 market days prior to suspension. This would mean about $1.50

24 Dec 2021 to 31 Dec 2021 is not considered market days for Best World since there is no transaction done as the share had been suspended. I think the rule is very clear here.

(i) “Average Closing Price” means the average of the closing market prices of the Shares over the last five (5)
Market Days on which transactions in the Shares were recorded immediately preceding the date of the Market
Purchase by the Company or, as the case may be, the date of the making of the offer (as defined below)
pursuant to the Off-Market Purchase, and deemed to be adjusted for any corporate action that occurs during
the relevant five (5) Market Day period and the date on which the purchases are made

Thanks Ghchua,

That means Best World has failed to adhere to its clause.

If we factor in 18 April, 22-24 and 09 May, it will be $1.716 per share or $2.059 (if it is 120%)

If it is 17-18 April and 22-24 April, it will be $1.812.

[dreamybear]

Hi header,

Thanks for your response. Actually I am still editing my previous post coz I always try to condense as much as possible into a single post because I strive not to lengthen the already long thread. 

I agree maintaining trust is impt but we have to look at the actions of the management and make an educated judgement based on whatever was disclosed to us.

And now by not offering a higher buyback price which the company can comfortably afford and after waiting all this while, I am not sure how all these inspire goodwill towards the mgmt. In any case, I am not sure how many Taiwanese and Chinese investors(who are also distributors) are there. I think - for the distributors, representing a DS company which is stable, profitable and growing is important but shareholder returns/matters may not matter as much.

I have not decided on the offer(my entry price is low, and I am still in the green). Yourself ?

Nevertheless, I am mindful some fellow shareholders bought at a price higher than $1.36 and some in the chat group intend to nurse a loss. It is just heart-breaking(of course myself is also disappointed by the price) because the company could have done more.

Of course, the eventual outcome still remains to be seen, maybe there will be future decent dividends, higher buyback price - who knows ? But on the other hand, can future off-mkt buyback be even lower than $1.36 ?

Actually, why not declare a $0.136 per share dividend instead of buying back 10% at $1.36 ?

------------
FY2020 net cash flow from operating activities circa $160m.
https://links.sgx.com/FileOpen/2021%2002...eID=649438

FY2021 cash flow probably more ...

[ghchua]

Thanks Ghchua,

That means Best World has failed to adhere to its clause.

If we factor in 18 April, 22-24 and 09 May, it will be $1.716 per share or $2.059 (if it is 120%)

If it is 17-18 April and 22-24 April, it will be $1.812.

I think the rule is very clear again.

The purchase price to be paid for the Shares pursuant to
the purchases or acquisitions of the Shares must not exceed:
(a) in the case of a Market Purchase, one hundred and five per cent. (105%) of the Average Closing Price (as
defined hereinafter); and
(b) in the case of an Off-Market Purchase pursuant to an equal access scheme, one hundred and twenty per cent.
(120%) of the Average Closing Price (as defined hereinafter)

The key word is must not exceed. It doesn't mean I have to offer maximum at 120%.

[CY09]

Thanks Ghchua,

Understand what you meant. In essence while the last 5 day average price is $1.716, the management of Best World decided to offer $1.36 which is the lowest closing price.

They do not run foul of any technical clauses but are just being unfriendly to minority shareholders. This has been a common trend among many Singapore listed companies, Singholdings, SL and now Best World