Forterra Trust (formerly: Treasury China Trust)

[greengiraffe]

Sounds like typical consultant advice...

Interesting piece of advice on the offer - "not fair but reasonable"
______________________________________________________

10.
CIMB’S ADVICE ON THE OFFER
After carefully considering all available information and based on our assessment of the financial terms of the Revised Offer, we are of opinion that on balance, the financial terms of the offer are not fair but reasonable.

IDs concur.

http://infopub.sgx.com/FileOpen/Forterra...eID=327335

[specuvestor]

Means market price now is not fair yet people all dumping... except for the 13%?

I didn't read the advice but guessing it is "reasonable" because no better offer right?

[Vseeker]

look like for those still holding out: its Game Over very soon !!!

today: 08-Dec2014; got another 1.511m units accepted Offer,
NOW OFFEROR control Aggregate=229,663,793 Units (89.36% based on existing issued units.)

SO
1) Based on Current IssShrs of 257,019,717 => Only need another 1,653,952 shrs (0.64%) to hit 90% Mandatory Acquisition Level

2) if based on MAX potential IssShrs of 259,529,717 => need another 3,912,952 shrs (1.51%) to hit 90% Mandatory Acquisition Level

but if all the additional 2.51m new Units (if Units Options get excercised) are from parties friendly to Offeror and will ACCEPT OFFER,
then its down to ONLY 1,402,952 shrs (0.54%) to 90% Mandatory level.

NB: Shrs & Units to mean the same thing here...

[Boon]

To me, the rules are "not fair and not reasonable"
_______________________________________________________________________________________________________________

This Practice Statement will apply to transactions announced from 9 July 2014.

SECURITIES INDUSTRY COUNCIL
(“SIC” OR THE “COUNCIL”)
PRACTICE STATEMENT ON THE OPINION ISSUED BY AN
INDEPENDENT FINANCIAL ADVISER IN RELATION TO OFFERS,
WHITEWASH WAIVERS AND DISPOSAL OF ASSETS UNDER THE
SINGAPORE CODE ON TAKE-OVERS AND MERGERS (THE “CODE”)

When advising the board of the offeree company on an offer, the IFA should conclude clearly and unequivocally in its advice whether an offer is “fair and reasonable”. The term “fair and reasonable” should be regarded as comprising two distinct concepts.

http://www.mas.gov.sg/~/media/resource/s...un2014.pdf

http://www.wongpartnership.com/index.php...nload/1343
________________________________________________________________________________________________________________

Can an unfair deal be reasonable?

aksaroya — 7 June 2013

"Even with explanation it is hard for most investors to digest advice that they should support something that is described as unfair yet reasonable. IAs are meant to safeguard the interest of shareholders by enabling them to make informed decision on certain transactions. However, when investors find it difficult to take independent advice, it is neither a fair nor reasonable solution."

http://blogs.accaglobal.com/2013/06/07/c...easonable/

[Boon]

SUMMARY OF ANALYSIS (CIMB)
In arriving at our advice to the Independent Directors on the Revised Offer, we have considered, inter alia, the following factors which should be read in the context of the full text of this letter:

(i) The Group’s recent historical financial performance;
(ii) During the 3-year period leading up to the Offer Announcement Date, trading in the Units occurred on approximately 93.8% of all market days;
(iii) For the 3-year period leading up to the Offer Announcement Date, the Units traded within a range of S$1.000 to S$2.450. For the 1-year period leading up to the Offer Announcement Date, the Units traded within a smaller range of S$1.33 to S$2.20;
(iv) The Final Offer Price represents a premium of approximately 25.07%, 39.84%, 49.70% and 51.11% over the 1-year VWAP, 6-month VWAP, 3-month VWAP and 1-month VWAP, respectively;
(v) The Final Offer Price represents a premium of approximately 32.35% over the closing price of the Units of S$1.700 on 3 November 2014, the last traded market day prior to the Offer Announcement Date;
(vi) Between the Offer Announcement Date to the Latest Practicable Date, the Units traded between a range of S$1.855 to S$2.270, and the Final Offer Price is slightly below the highest end of the range;
(vii) As at the Latest Practicable Date, the Final Offer Price is the same as the closing price of the Units;
(viii) The average daily trading volume has generally declined in recent years from a 3-year average daily trading volume of 116,030 units, representing approximately 0.24% of Forterra’s free float, to a volume of about 63,421 Units over the more recent 1-month period prior to the Offer Announcement Date, representing approximately 0.13% of Forterra’s free float;
(ix) During the 3-year period leading up to the Offer Announcement Date, the Units had mostly underperformed the FSSTI and FSTREI except for the period from August 2013 to January 2014. From February 2014 to the 21 November 2014, the Units continued to
underperform FSSTI and FSTREI but showed significant increase after the Offer Announcement Date;
(x) The Final Offer Price is at a discount of approximately 41.9% to the RNAV per Unit of S$3.87 as at 30 September 2014;
(xi) Over the 3-year period prior to the Offer Announcement Date, the Units have traded at a discount of between 47.1% and 77.1% to the trailing NAV per Unit and the discount implied by the Final Offer Price to the NAV per unit as at 30 September 2014 of approximately 42.0% is below the lowest end of the range;
(xii) The P/RNAV and P/NAV multiples of Forterra implied by the Final Offer Price is below the range of the multiples of the Comparable Companies;
(xiii) The market price premia implied by the Final Offer Price is above the corresponding mean and median premia of the last transacted price, 1-month VWAP and 3-month VWAP of the Comparable Precedent Transactions;
(xiv) The P/NAV of Forterra implied by the Final Offer Price is lower than the corresponding mean and median multiples of the Comparable Precedent Transactions;
(xv) The market price premia implied by the Final Offer Price is above the premia over the last transacted price, 1-month VWAP and 3-month VWAP implied by the PAG Acquisition;
(xvi) The P/NAV of Forterra implied by the Final Offer Price is above the P/NAV multiple of Forterra implied by the PAG Acquisition;
(xvii) The market price premia implied by the Final Offer Price is below the premia over the last transacted price, 1-month VWAP and 3-month VWAP implied by the 2013 Acquisition;
(xviii) The P/NAV of Forterra implied by the Final Offer Price is lower than the P/NAV multiple implied by the 2013 Acquisition;
(xix) The market price premia implied by the Final Offer Price is above the premia over the last transacted price, 1-month VWAP and 3-month VWAP implied by the PAG Disposal;
(xx) The P/NAV of Forterra implied by the Final Offer Price is equal to the P/NAV multiple implied by the PAG Disposal;
(xxi) The market price premia implied by the Final Offer Price is within the range of premia and higher than the mean and median premia of the last transacted price, 1-month VWAP and 3-month VWAP of the Precedent Takeovers;
(xxii) The market price premia implied by the Final Offer Price is above the range of premia of the last transacted price, 1-month VWAP and 3-month VWAP of the Non-Privatisation Transactions;
(xxiii) The rationale for the Revised Offer;
(xxiv) The Offeror does not intend to make major changes to the business or operations of Forterra;
(xxv) As at the Latest Practicable Date, the Offeror already has statutory control of Forterra; and
(xxvi) As at the Latest Practicable Date, there is no publicly available evidence of any alternative offer for the Units.

Based upon, and having considered, inter alia, the factors described above and the information that has been made available to us at the Latest Practicable Date, we are of the opinion that as of the Latest Practicable Date, the Final Offer Price is on balance, not fair but reasonable under current prevailing……………………………………………………….

Comments:
1) It is interesting to note that comparisons have been made on PAG’s acquisitions and disposal.
2) Based on RNAV and NAV, the offer price is still at a very deep discount, which seems hard to justify………………….
3) The analysis doesn’t seem to have “separately” accounted for what is “not fair” and what is “reasonable”.....................
4) VWAP is security market based – whereas NAV/RNAV is physical property market based. –Takeover rules which allow Offer price to be based on VWAP only with zero weighting given to the value of underlying assets in the physical property market, is “not fair” and therefore “not reasonable”,IMO – there should at least be a “floor”, say not less than 70% of RNAV.