SC Global Developments

[yeokiwi]

One question that I would like to ask:

Wheelock's 15.87% stake in SC Global (acquired at an average price of $2.35 accordingly to late David Lawrance in an interview with BT in 2009) is not classified as a free float owned by public in SC Global's annual report.

However in the voluntary offer circular, Wheelock is not considered as a concerted party to Simon Cheong.

So would SC global be delisted if the public float be less than 10% (assuming Wheelock's stake is excluded from the calculation of free float held by public).

Thanks in advance.

GG

It will likely be the same case as Pertama. Fidelity's stake in Pertama, classified as substantial shareholder, is not considered as free float but neither it is a concerted party to Harvey. So, Harvey has less than 90% but the free float is less than 10%.

Once the public float drops to less than 10%. SC Global will have to suspend its share trading.
But, Simon Cheong cannot execute a compulsory delisting since he does not have >90% of the total no. of shares.

[greengiraffe]

One question that I would like to ask:

Wheelock's 15.87% stake in SC Global (acquired at an average price of $2.35 accordingly to late David Lawrance in an interview with BT in 2009) is not classified as a free float owned by public in SC Global's annual report.

However in the voluntary offer circular, Wheelock is not considered as a concerted party to Simon Cheong.

So would SC global be delisted if the public float be less than 10% (assuming Wheelock's stake is excluded from the calculation of free float held by public).

Thanks in advance.

GG

It will likely be the same case as Pertama. Fidelity's stake in Pertama, classified as substantial shareholder, is not considered as free float but neither it is a concerted party to Harvey. So, Harvey has less than 90% but the free float is less than 10%.

Once the public float drops to less than 10%. SC Global will have to suspend its share trading.
But, Simon Cheong cannot execute a compulsory delisting since he does not have >90% of the total no. of shares.

Hi kiwi,

Thanks for the invaluable feedback.

Simon's privatisation attempts is to "Singaporised" or localised SC Global in order to avoid paying excessive penalties for his priced assets that has been delicately crafted.

In fact, Wheelock's stake in SC Global will be a big thorn to his efforts as he can't afford to have even a single shareholder that is non-Singaporean. Otherwise all his mopping up from the mkt post the announcement of the offer will be futile.

Unless there is special arrangement with Wheelock post a potential delisting to get round the rules, then Simon may just have to pay up in order to continue his present mission.

In any event, execution risks has largely been removed from the development, its the anti-speculative measures that is not on his time-line. There is no doubt that time heals all wounds but really Simon have to "Singaporise" SC Global even before he can think of holding on to his luxury collections with additional holding costs in terms of additional penalties.

Looks like Mr Mkt is betting that an improved offer may be on the radar.

[specuvestor]

"concerted party" is not defined by shareholding. Simon Cheong only need 74% to mandatory delist if Wheelock is acting as collaborator.

I don't think there will be higher offer while listed. That's why first step is voluntary delisting.

[wee]

Can I just clarify if my understanding is correct - to delist, a company needs 75% vote FOR, and no more than 10% votes against? If so there is no need to hit 90%.

[greengiraffe]

This St article appears to clarify on the rules of delisting for SC Global.

As of yesterday, Simon and related parties has 60.74%, Wheelock 15.87% and directors 2.57% - all total 79.18%, so Simon is 10.82% away from the delisting treshold.

ST: SC Global chief inches towards delisting

13% more shares needed to reach privatisation threshold

Published on Dec 08, 2012


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Mr Cheong acquired another 0.42 per cent of the total issued share capital of SC Global through his investment holding firm, MYK Holdings, yesterday. -- PHOTO: COURTESY OF SIMON CHEONG

By Magdalen Ng

CHAIRMAN and chief executive of high-end property developer SC Global, Mr Simon Cheong, has inched closer to taking the firm private.

Yesterday, he acquired another 0.42 per cent of the total issued share capital of SC Global through his investment holding firm, MYK Holdings, bringing his total shareholding to 58.58 per cent.

This means Mr Cheong needs to get his hands on approximately 13 per cent more of the company's shares to reach the 90per cent threshold for the privatisation to go through.

The 90 per cent threshold is significant because, according to the Singapore Exchange (SGX) listing rules, the free float of a company's shares cannot fall below 10 per cent.

The 16 per cent stake held by Wheelock Properties, and 2 per cent stake held by SC Global's executive director David Tsang also count towards the 90 per cent.

Free float shares exclude shares held by directors, the chief executive, substantial shareholders with more than a 5 per cent stake, controlling shareholders of the issuer or its subsidiaries.

Wheelock's and Mr Tsang's shares are not considered part of the free float.

Shares held by associates of the persons mentioned earlier are also excluded.

Mr Cheong launched a bid to take SC Global private on Wednesday, offering $1.80 per share, which values the property developer at about $745 million.

He said that the delisting will allow SC Global greater flexibility to manage and plan the business.

Mr Cheong added that going private would relieve SC Global of public listing costs and requirements, including reporting quarterly results.

The high-end residential market has been lacklustre lately, with many of SC Global's developments left with a large number of units unsold.

Its 66-unit The Marq on Paterson Hill still has about 33 unsold units as at the end of September. Another development, Hilltops, has 196 apartments out of 241 yet to be sold.

The sluggish pace of sales is expected to continue, according to a Credit Suisse report.

This follows the latest round of property cooling measures announced by the Monetary Authority of Singapore in October.

SC Global shares closed 0.5 cent lower at $1.80 yesterday.

songyuan@sph.com.sg

---

This is probably the article that triggers today's sudden interests in SC Global...

http://www.todayonline.com/Business/EDC1...-SC-Global

Offer price 'undervalues SC Global'
Banker close to some overseas institutional shareholders is advising his clients not to take up the offer
by Conrad Raj 04:45 AM Dec 13, 2012




SINGAPORE - Some SC Global Developments shareholders might not accept Chief Executive Simon Cheong's offer to take the property company private at S$1.80 a share, even though that is a near 50-per-cent premium to the closing price before the bid.

A banker close to several overseas institutional shareholders thinks that the bid undervalues the company and is advising his clients not to take up the offer.

"The offer is at too steep a discount to its RNAV (revalued net asset value) which is around S$3.50 a share," the banker said.

He pointed out that most other property companies, like Robert Kuok's Allgreen Properties, were done at a 20- to 30-per-cent discount to their RNAV when taken private.

He also noted that the company also faces pressure to meet sales deadlines for completed projects like the Marq and Hilltops or face penalties.

"We estimate it could cost SC Global as much as S$70 million next year and perhaps another S$100 million the following year if the sales deadlines are not met. So, Mr Cheong could easily raise his bid by 20 cents a share to induce shareholders to part with their holdings."

The banker said that this could be done through a two-tier offer where the higher price could kick in if, say, a 90-per-cent acceptance level were reached.

"It could be similar to what Toll Holdings did when it took Sembawang Kimtrans private in 2007 with an initial offer of 70 cents a share which was raised to 80 cents when it reached over 90 per cent acceptance," he said.

Analysts' estimates of SC Global's RNAV vary widely. AmFraser values it at S$1.98 a share, while Maybank Kim Eng thinks it is around S$4 a share, meaning that the discount could be as low as 18 cents, or 9 per cent, a share.

Six broking houses that follow SC Global have advised shareholders to accept the offer as there is little chance of a counterbid and its earnings have been very lumpy of late.

Mr Cheong, who is overseas, could not be reached for comment. However, he is less than 11 per cent from taking the company private as his holding crossed 60.14 per cent on Tuesday.

To this must be added Wheelock's 16 per cent as well as directors' holdings of about 3 per cent.

Under SGX rules, directors, the chief executive, substantial shareholders, or controlling shareholders of the issuer are not included in the public tranche.

[specuvestor]

It's a bit more complicated: free float is under SGX listing rules while 90% CONCERTED PARTY is under Companies Act takeover code

[greengiraffe]

If we look at the ST article dated 8 Dec 12 and Today's Conrad Raj article, it appears to be quite straight forward:

SGX's definition of free float applies in this case - Simon 60.74% and concerted parties' stake, Wheelock 15.87% and those directors 2.57%. Simon picked up a mere 26,000 shares at the offer price today.

The rest of the volume are likely to be green-mailers riding on Conrad Raj's suggested theory that Simon may have to sweeten his offer to entice shareholders other than the 3 parties mentioned above.

Conrad Raj is certainly a experienced financial journalist. For him to tap on previous corporate buy-out experience on SGX, he has effectively aired the views of a small but crucial part of shareholders yearning for an improved deal in order for Simon to move towards his "Singaporisation" of SC Global.

Mr Market has signalled clearly today on such possibility and now the ball is in Simon's court to reconsider his present offer. Note that in the only offer announcement so far, there is no mention that the offer price is the final deal on the table.

Akan Datang

[Nick]

WHEELOCK PROPERTIES ACQUIRES ADDITIONAL SHARES IN SC GLOBAL DEVELOPMENTS LTD

http://info.sgx.com/webcoranncatth.nsf/V...3004B9FF4/$file/WPSL_PR_131212.pdf?openelement

[greengiraffe]

Wheelock is using real action to tell SC Global and their independent financial advisers alongside with directors that "please do not use the penalty taxes as an excuse to buyout on the cheap".

Wheelock is an experienced luxury property developer and hence their assessment is unlikely to be too far out.

I suspect that penalty taxes for unsold inventory will be an important factor in the valuation of SC Global to be considered by independent financial advisers. Hence there will be a discount to the RNAV as estimated by Wheelock should it remain as a long term investor in SC Global (irregardless of its listing status).

If we refer back to the interview with the late David Lawrence who had apologised to Wheelock shareholders for taking a hedge in SC Global before the peak of GFC, I suspect Wheelock is trying to regain some pride of investing in SC Global. This can be done by hopefully recovering their historical costs so that they can close the chapter with the late Mr Lawrence and with Wheelock shareholders as well.

Certainly interesting to see how journalist and analysts view the latest twist.

http://cpf.gov.sg/imsavvy/infohub_articl...7D&print=1

Upbeat outlook on luxury market

Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission 31/10/2009
WHEELOCK Properties (Singapore) CEO David Lawrence remains upbeat about prospects for Singapore's luxury residential property market, as the island is increasingly attracting rich people and businesses.

'The interesting thing is that more and more people are becoming PRs and citizens,' he says. 'A lot of them are very rich and want the best product. So you've got to be a good developer producing good products like Wheelock or SC Global or Hotel Properties Ltd (HPL).'

Wheelock owns about 16 per cent of SC Global and almost 21 per cent of HPL. 'We're happy with our stakes in these companies,' Mr Lawrence said in a recent interview with BT.

In April last year, he apologised to shareholders at an annual general meeting for having bought a stake in SC Global at the top of the market in 2007. But now he lets on: 'I should tell you that I have had approaches from Middle Eastern investors recently to buy our stake in SC Global and I said: 'Not interested. Thank you very much'.'

Wheelock acquired its SC Global stake at an average price of $2.35 a share. SC Global's stock price fell from a high of $3.40 in June 2007 to a low of 29.5 cents in March this year. It has since been recovering, ending at $1.41 yesterday, down one cent from Thursday's closing price.

The focus of the Singapore Government's recent measures to stabilise the property market are on the mass and mid segments, which Mr Lawrence reckons 'went out of control a little bit'. 'I don't think the government needs to be concerned about the luxury sector,' he said.

The government has done enough to cool the private residential property market - for instance, by promising to release more land in the first half of next year, he feels.

The recent phenomenon of developers chasing sites and paying high land prices has been fuelled by low interest rate loans to developers by banks. 'If this liquidity gets out of hand, the government can just release more sites. They've got plenty of sites ready to go,' Mr Lawrence said.

Around this time last year, he urged investors to buy Singapore property stocks because they were looking cheap after being battered during the financial crisis. Now that property stocks, along with the overall market, have surged - in some cases 100 per cent or even more - Mr Lawrence advises investors to switch out of property stocks and into real or physical assets. 'Property is one class of real assets and will provide a long-term hedge against inflation,' he argued.

'I am not saying the property markets are going to shoot up, because the Urban Redevelopment Authority is there to stabilise the market. But now is the time to take profit on paper assets and move into physical assets, which are still the best long-term hedge against inflation. And inflation will be coming back in the next few years.'

Sovereign wealth funds and savvy investors are already following this strategy, Mr Lawrence says.

WHEELOCK PROPERTIES ACQUIRES ADDITIONAL SHARES IN SC GLOBAL DEVELOPMENTS LTD

http://info.sgx.com/webcoranncatth.nsf/V...3004B9FF4/$file/WPSL_PR_131212.pdf?openelement

[specuvestor]

WHEELOCK PROPERTIES ACQUIRES ADDITIONAL SHARES IN SC GLOBAL DEVELOPMENTS LTD

http://info.sgx.com/webcoranncatth.nsf/V...3004B9FF4/$file/WPSL_PR_131212.pdf?openelement

This is an interesting development that throws a spanner in the works. They could have "settle amicably" after SCGD delist. SCGD will lose value from extension levy if this drags on and do no benefit to Wheelock.