Lee Kim Tah Holdings

[freedom]

personally, I tend to think REIT is never a good capital instrument in Singapore. MAS allows REITs to gear up as much as 60% and gives tax benefit if REITs pay at least 90% of its income as dividend. Essentially, MAS is trying to kill the REITs because REITs can't repay its debt because of 90% distribution, but may not be able to refinance because they borrow as much as 60% of its total assets. Why does MAS provide low cost loan to REITs? otherwise, please don't encourage REITs to borrow too much and don't encourage REITs to pay too much as distribution. I believe it is more conservative to keep income-generating properties as investment properties within the group, rather than listing it out from a long term point of view. Of course if companies just want to cash out, nothing wrong to start a REIT.


Personally, I prefer way of CityDev holding its assets within to way of Capitaland listing most of its mature assets. in short term, Capitaland may get more benefit, long term, Capitaland loses too much to CityDev.

[dydx]

I believe the CK Tang story below as reported in today's BT is interesting enough for LKT shareholders to bear in mind.....

"Published August 19, 2011
Payday for CK Tang minorities who waited and waited

By JAMIE LEE

(SINGAPORE) CK Tang has offered an enticing deal to about 500 minority shareholders who have held on to shares of the delisted company. And what a difference two years can make.

The fresh move, a capital reduction exercise prompted by the board, creates a sharp contrast with the delisting offer that the majority shareholders of CK Tang put out - a price that worked out to be a discount to the revalued net asset value (RNAV) then.

CK Tang yesterday proposed to cancel all remaining shares held by minority shareholders at $1.30 per share. This represents a 56.6 per cent premium over the previous delisting price of $0.83.

The latest offer was also sweetened by a 15 per cent premium over the fair value of $1.13 - an amount determined by financial adviser PricewaterhouseCoopers (PwC), which was appointed by the board.

'The board decided that, as a gesture of goodwill, we might as well add another 15 per cent,' CK Tang CEO Foo Tiang Sooi told reporters yesterday.

'We thought it was timely to try to make it a win- win situation, to give the remaining minority shareholders a chance to exit at what we believe to be a very reasonable price,' he said, adding that the majority shareholders, brothers Tang Wee Sung and Tang Wee Kit, agreed. 'As far as the board is concerned, there is no hidden agenda.'

If its latest proposal goes through - which would return some $5.7 million to the minority shareholders - CK Tang would finally be wholly owned by the founding Tang family, after three attempts over five years to wrest back full control. These included its successful privatisation move in 2009.

The Tang brothers took the retailer private at $0.83 per share in 2009, against an RNAV of $0.93 per share as at March 31, 2009.

Then, minority shareholders protested that the flagship store was undervalued because the company had not taken redevelopment potential into account.

This could have bumped up the offer price, some shareholders said, adding that the Tangs should at least match the RNAV then.

As to why the board did not prompt a 'goodwill gesture' in 2009, Mr Foo argued that it was not the board's initiative then since the delisting offer was provided by the majority shareholders. 'It wasn't our call,' he said.

The brothers, who collectively owned close to 90 per cent of CK Tang two years ago, secured enough votes for the delisting to go through, and subsequently ended up with some 98 per cent of the company.

This was accumulated not just at the point of the delisting, but over the last two years, noted Mr Foo, saying that over 100 shareholders had written to the company to ask for the Tang brothers to buy them out. These sales were transacted at the delisting price of $0.83, said Mr Foo.

Between 2009 and 2011, the Tang brothers have spent an estimated $16 million to raise their stake by 8 per cent.

The proposed price for the share cancellation comes with a few layers of premium piled on the RNAV, which has gone up.

The fair value is 10.8 per cent higher than the RNAV as at March 31, 2011, and reflects the equity value of CK Tang. This is the total of the enterprise value of the retail business and the market value of the department store property, less net debt and minority interest. The audited RNAV had risen from $220 million in fiscal 2009 to $241.5 million in fiscal 2011 after factoring in revaluation.

PwC defined fair value as the amount for which an asset could be exchanged, or a liability settled, between two parties.

Despite the increase in RNAV over the last two years, the Tang brothers reiterated yesterday that there are no plans to redevelop the property in the foreseeable future.

A total of 4.38 million shares will be cancelled by the proposed capital reduction, which needs to go through a vote at an extraordinary general meeting (EGM) on Sept 15.

Mr Foo said the capital reduction will be compulsory once the company secures 75 per cent of votes from minority shareholders present at the meeting who are in favour of the exercise.

Mak Yuen Teen, associate professor at the NUS Business School, said that the price offered to minority shareholders in 2009 was not fair because the board should have considered the value from the best use of the property.

But he said the remaining minority shareholders are now gaining more in exchange for holding illiquid shares and having less protection in terms of governance and disclosure."

[brattzz]

CK delisting saga was a long drag out fight between all parties... goodness.. didn't expect them to be so generous this time!!

Congrats!

[yeokiwi]

CK delisting saga was a long drag out fight between all parties... goodness.. didn't expect them to be so generous this time!!

Congrats!

Genmag minority shareholders are stilling fighting on...
Not sure whether they can see the daylight a not.

[dydx]

There are 2 main overriding factors that will determine success for minority shareholders in extracting maximum value for themselves in a privatization situation -

1. The underlying business and/or asset(s) are highly valuable.
2. The party you are dealing with is rich enough to offer a a GO price close to the intrinsic value of the underlying business or asset(s).

The above 2 factors are present in CK Tang's case. Of course, luck and patience matter too.

[pianist]

i just wonder if one is minority shareholder of a delisted company, what sort of corporate correspondence and avenue does one have? i guess it all diy from collecting dividends to attending AGM and approving directors' fee and appointment?

[RBM]

I could not help noticing the high turnover of LKT shares during last Friday's session. At 303,000 shares, this the second highest daily turnover in LKT in over two (2) years. Highest daily turnover since June 2009 was achieved in January 2011, when LKT shares were last trading above S$ 0.60. Will be interesting to see any LKT disclosures to the SGX on Monday evening - not only because of the turnover level but also to see if the Lee's were willing to pay a tad more than recently for their additional shares.

[dydx]

Last Friday (19Aug11), the Lee Family through their private investment holding company Lee Kim Tah Investments P/L bought back another 203 lots (out of the total 303 lots transacted) at an average price of $0.55581/share.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument

[dydx]

Last Friday (19Aug11), the Lee Family through their private investment holding company Lee Kim Tah Investments P/L bought back another 203 lots (out of the total 303 lots transacted) at an average price of $0.55581/share.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument

[brattzz]

think we should join in the buying.. something is definately UP! :O