Forterra Trust (formerly: Treasury China Trust)

[Boon]

Boon san

Rather than wait for NF, is it easier for PAG or APG to ask for a shareholders' vote to authorise the directors to sell away all the assets and distribute the proceeds as dividends? I know I will support such a resolution.....

Interesting article:

http://www.rodyk.com/usermedia/documents...letin2.pdf

The right of a shareholder to requisition/call for a general meeting under the Companies Act

For companies incorporated in Singapore, shareholders have rights under the Companies Act of Singapore (CA) and other legislation, as well as under the common law and usually also the company’s memorandum and articles of association (M&A).

(1) The CA provides for two or more members holding not less than ten percent of the total number of issued shares of the company (excluding treasury shares) or such lesser number as is provided in the M&A to call a meeting of the company.
(2) The directors must as a result convene.................................

The Singapore Code on Takeovers and Mergers
(1) The Singapore Code on Takeovers and Mergers (CodeTM) provides the main regulatory framework for the conduct of takeover and merger
transactions in Singapore.
(2) An activist shareholder is likely to seek support from fellow shareholders in pursuit of his agenda.
(3) The activist shareholder should consider the provisions in the CodeTM as acting in concert with the board or other shareholders could result in the parties having to make a general offer.
(4) The Securities Industry Council (Council) will presume shareholders who requisition or threaten to requisition the consideration of a board control-seeking proposal at a general meeting, together with their supporters as the date of requisition or threat, to be acting in concert with each other and the proposed directors. Such parties will be presumed to be acting in concert once an agreement or understanding is reached between them in respect of a board control-seeking proposal with the result that subsequent acquisitions of interests in shares by any member of the group could give rise to an obligation to make a general offer.
(5) Where a party has .............................

(vested)

[PekingDuck]

Boon san

Rather than wait for NF, is it easier for PAG or APG to ask for a shareholders' vote to authorise the directors to sell away all the assets and distribute the proceeds as dividends? I know I will support such a resolution.....

Interesting article:

http://www.rodyk.com/usermedia/documents...letin2.pdf

The right of a shareholder to requisition/call for a general meeting under the Companies Act

For companies incorporated in Singapore, shareholders have rights under the Companies Act of Singapore (CA) and other legislation, as well as under the common law and usually also the company’s memorandum and articles of association (M&A).

(1) The CA provides for two or more members holding not less than ten percent of the total number of issued shares of the company (excluding treasury shares) or such lesser number as is provided in the M&A to call a meeting of the company.
(2) The directors must as a result convene.................................

The Singapore Code on Takeovers and Mergers
(1) The Singapore Code on Takeovers and Mergers (CodeTM) provides the main regulatory framework for the conduct of takeover and merger
transactions in Singapore.
(2) An activist shareholder is likely to seek support from fellow shareholders in pursuit of his agenda.
(3) The activist shareholder should consider the provisions in the CodeTM as acting in concert with the board or other shareholders could result in the parties having to make a general offer.
(4) The Securities Industry Council (Council) will presume shareholders who requisition or threaten to requisition the consideration of a board control-seeking proposal at a general meeting, together with their supporters as the date of requisition or threat, to be acting in concert with each other and the proposed directors. Such parties will be presumed to be acting in concert once an agreement or understanding is reached between them in respect of a board control-seeking proposal with the result that subsequent acquisitions of interests in shares by any member of the group could give rise to an obligation to make a general offer.
(5) Where a party has .............................

(vested)

Thanks Boon, this might be invoked depending on the board decision on the GO.
I see Credit Suisse (NY) now have a deemed interest > 14% as a subsidiary (of whom, Credit Suisse?) transfers in 9.935k units to Credit Suisse AG . Funny, I don't see this holding listed anywhere on the share register in the name of Credit Suisse, just their holding of 25.676k. Anyone else spot where these shares have come from? I presume this is a nominee holding for an unnamed beneficiary - anyone have any idea who is behind this? I smell hedge fund and hopefully one who is interested in an offer price closer to $3...and not an ally of NF.
I also understand the board are appointing a Singapore based advisor before responding to the offer - any ideas who they might be..?
Plenty to ponder..
PD

[Boon]

Hi PD,

From page 147 of AR2013:

2
“In the provision of prime brokerage services to the beneficial owners, Credit Suisse Securities (Europe) Limited has the rights of use of the 25,675,245 units held in Forterra Trust and registered in the name of Raffles Nominees Pte Ltd, and is deemed to have an interest in such units. Credit Suisse Group AG (“CSGAG”) is deemed interested in the 25,675,245 units registered in the name of Raffles Nominees Pte Ltd through Credit Suisse AG (which is the subsidiary of CSGAG); which in turn holds Credit Suisse Investments (UK) (which is a subsidiary of Credit Suisse AG); which in turn holds Credit Suisse Investment Holdings (UK) (which is a subsidiary of Credit Suisse Investments (UK)), and Credit Suisse Securities (Europe) Limited is a subsidiary of Credit Suisse Investment Holdings (UK). Each of CSGAG, Credit Suisse AG, Credit Suisse Investments (UK) and Credit Suisse Investment Holdings (UK) does not hold any interests in units in Forterra Trust other than through Credit Suisse Securities (Europe) Limited.”

The 25,675,245 shares are registered in the name of Raffles Nominees Pte Ltd

It has now increased to about 14%.

“The change in interest of CSAG arises by way of a subsidiary's transfer in of 9,935,000 units. In the provision of prime brokerage services to the beneficial owners, CSAG's subsidiaries have the rights of use of the units held and is deemed to have an interest in such units.”

Interestingly, this happened on 04-Nov, the day of the offer announcement.

Credit Suisse Group (CSG) does not own them but has the rights of use of these shares – hence is deemed interested in these shares.

It looks like these shares have been charged as security, borrowed or lent. .

If these guys are concert parties to NF in the takeover, it would have been disclosed during the offer announcement on 04-Nov-2014, apparently, it was not.

Wondering how these shares would be weighted in determining the 10% free float ? Counted or not counted ?

Please note that, Credit Suisse (Singapore), CSS, happened to be the Financial Adviser to NF.

Coincidence, perhaps !

(Vested)

[Boon]

Boon, clearly a low-ball (& derisory) ranging shot by NF. I am surprised they left this until after the refinancing of TP - the biggest outstanding risk to the trust has been removed and their main asset is about to become cash generative. The options didn't expire until June 15 and they had another 8 months to re-fi TP. Strange, they now have to pay a fair price on a largely unrisked asset.

From what I recall, PAG paid between 1.80 and 2.00 for their shares, Credit Suisse and APG I don't know. I go with the guys at Panmures and believe NF will have to go above 2.50 to encourage the big holders to sell. If this bid is not successful they can't bid agin for another 12 months, and the shares will have re-rated plenty more by then.

I am trying to get contact emails for the independent directors to communicate direct with them. They hold the key and we will see how independent they really are. The assets within the trust could now easily be marketed and sold at prices close to the carried value, so how can the board back such a low-ball bid when it is their duty to shareholders to recommend a better alternative. Sod NF, they now have to pay up to get my shares..!

If one look through the shareholdings in the ARs, APG has been a SSH for a long time. I would not be surprised if their initial cost + opportunity costs over the years add up to be near SGD 2.98, if not more.

None of the beneficial owners behind Credit Suisse Group's "interested shares" is a SSH. Otherwise. , it would had been disclosed.

(vested)

[Boon]

Interestingly, here are some of the implied Cap Rate used by other Reits in the valuation of their China properties

Hui Xian (Reit) : (HX)
Office & Retail portion only (Beijing)
From page 122 & 123 of AR2013:
Gross Revenue = 959 + 785 = RMB 1,744 m per annum
CV= Carrying Value = 15,550 + 14,566 = RMB 30,116
Implied Cap Rate = 1,744 / 30,116 = 5.8% (Gross)

MGCCT (Mapletree Greater China Commercial Trust)
Property : Gateway Plaza, Beijing (Office/Retail)
From page 68 of AR2013:
Implied Cap Rate = 6.5% (Gross)

CRCT :
Retail properties across China including Shanghai
From AR2013:
Gross Revenue = SGD 160 m per annum
CV = SGD 2,057 m
Implied Cap Rate = 160 / 2,057 = 7.8% (Gross)

(vested)

[greengiraffe]

In my opinion, this offer is just a procedure that NF has to comply due to the 30% trigger.

I seriously doubt that there will be any war given that they are well aware that the offer is too low...

Will see.

Not Vested
GG

[Boon]

Interestingly, here are some of the implied Cap Rate used by other Reits in the valuation of their China properties

Hui Xian (Reit) : (HX)
Office & Retail portion only (Beijing)
From page 122 & 123 of AR2013:
Gross Revenue = 959 + 785 = RMB 1,744 m per annum
CV= Carrying Value = 15,550 + 14,566 = RMB 30,116
Implied Cap Rate = 1,744 / 30,116 = 5.8% (Gross)

MGCCT (Mapletree Greater China Commercial Trust)
Property : Gateway Plaza, Beijing (Office/Retail)
From page 68 of AR2013:
Implied Cap Rate = 6.5% (Gross)

CRCT :
Retail properties across China including Shanghai
From AR2013:
Gross Revenue = SGD 160 m per annum
CV = SGD 2,057 m
Implied Cap Rate = 160 / 2,057 = 7.8% (Gross)

(vested)

Offer price of SGD 1.85 is equivalent to paying market cap of 1.85 x 257 = SGD 475 m for FT

Conservatively, assuming FT is a one asset company which owns only TP
(Note that value of other assets less liabilities of other assets is positive).

Carrying Value (CV) of TP = SGD 1,616 m , as at 30-Sep-2014 (or equivalent to SGD 6.29 per share )
Debt of TP = SGD 553 m, as at 30-Sep-2014
Assumed Debt (TP) = SGD 625 m, at completion of TP
Offer price of SGD 1.85 is equivalent to paying 475 + 625 = SGD 1,100 m, gross of debt for TP ( = SGD 4.28 per share, gross of debt of TP )

(Note: Projection of Gross Revenue p.a. of TP are:
Current Management Guidance = in excess of RMB 500 million
Previous Management Guidance = in excess of RMB 700 million
Edison Research estimate for FY 2015 = RMB 349 million
Edison Research estimate for FY 2016 = RMB 504 million
Voyage Research estimate for FY 2015 = RMB 598 million
Voyage Research estimate for FY 2016 = RMB 753 million
Voyage Research estimate for FY 2017 = RMB 772 million)

If Market Value (MV) of TP = SGD 1,616 m:
For Gross Revenue (GR) = SGD 100 m p.a. (RMB 500 m), => implied cap rate = 100 /1,616 = 6.2%
For GR = SGD 110 m (RMB 550 m), => implied cap rate = 110 / 1,616 = 6.8%
For GR = SGD 120 m (RMB 600 m), => implied cap rate = 120 / 1,616 = 7.4%
For GR = SGD 130 m (RMB 650 m), => implied cap rate = 130 / 1,616 = 8.0%
For GR = SGD 140 m (RMB 700 m), => implied cap rate = 140 / 1,616 = 8.7%

If Market Value (MV) of TP = SGD 1,100 m :
For GR = SGD 100 m (RMB 500 m), => implied cap rate = 100 /1,100 = 9.0%
For GR = SGD 110 m (RMB 550 m), => implied cap rate = 110 / 1,100 = 10.0%
For GR = SGD 120 m (RMB 600 m), => implied cap rate = 120 / 1,100 = 11.0%
For GR = SGD 130 m (RMB 650 m), => implied cap rate = 130 / 1,100 = 11.8%
For GR = SGD 140 m (RMB 700 m), => implied cap rate = 140 / 1,100 = 12.7%

Would NF or anyone sell its properties so cheaply at such high cap rate?

TP1 & TP2 is scheduled to be opened next month (December 2014) – to be followed by TP3 in mid-year 2015.

By 2H2015 – development risks associated with TP would have been subsided and TP could then be classified as a “stabilized” asset of FT. And we are talking about months away, not years.

My take is – if there is no war from the emergence of a competing bid, there will be war down the roads between “controlling” and “non-controlling” shareholders, if NF fails to cross the 50% mark.

Now that NF has make a GO, it would be at greater risks if it fails to cross the 50% mark - this is the real intention of their bid, IMO.

Will see.

(vested)

[Boon]

APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

The Board wishes to inform the unitholders of Forterra (Unitholders) that it has on 11 November 2014 appointed CIMB Bank Berhad, Singapore Branch as the independent financial adviser (IFA) to advise the directors of the Trustee-Manager who are considered independent for the purposes of the Offer (Independent Directors)....

http://infopub.sgx.com/FileOpen/Appointm...eID=324002

(vested)

[Boon]

Interestingly, here are some of the implied Cap Rate used by other Reits in the valuation of their China properties

Hui Xian (Reit) : (HX)
Office & Retail portion only (Beijing)
From page 122 & 123 of AR2013:
Gross Revenue = 959 + 785 = RMB 1,744 m per annum
CV= Carrying Value = 15,550 + 14,566 = RMB 30,116
Implied Cap Rate = 1,744 / 30,116 = 5.8% (Gross)

MGCCT (Mapletree Greater China Commercial Trust)
Property : Gateway Plaza, Beijing (Office/Retail)
From page 68 of AR2013:
Implied Cap Rate = 6.5% (Gross)

CRCT :
Retail properties across China including Shanghai
From AR2013:
Gross Revenue = SGD 160 m per annum
CV = SGD 2,057 m
Implied Cap Rate = 160 / 2,057 = 7.8% (Gross)

(vested)

Metropolitan (Chongqing) : (Hui Xian Reit is buying from CKH + HW of Superman )
Retail Mall + Office Tower :
http://www.hkexnews.hk/listedco/listcone...110159.pdf (page 22)
Gross Revenue = 2 x RMB SGD 141 m = RMB 282 m p.a.
Appraised Value = RMB 4,104 m, Implied Cap Rate = 282 / 4,104 = 6.9%
Sales Price = RMB 3,910 m , Actual Cap Rate = 282 / 3,910 = 7.2%

[Boon]

Reject Offer - recommendation from nra capital................

Accept or reject? Forterra Trust’s biggest unitholder New Precise Holdings, an indirect wholly-owned subsidiary of Hong Kong developer Nan Fung Group, has made a mandatory cash offer of $1.85 for the group. The offer is due to the requirements of the Takeover Code, after Nan Fung exercised 3.05m options and brought its stake over 30%. The offer price is at 0.47x of its latest book value. Despite the current weak property market sentiment in China, we believe the offer price is too low for its quality assets. Reject offer. Forterra traded above S$1.85 after the takeover offer suggesting the market expects a higher valuation.

http://www.nracapital.com/research/sgxre...1411ck8qrl


(vested)