Avarga (formerly: UPP Holdings)

[weijian]

The Tongs started with 32.84%, bought over Peter Lim's stake to assume majority control at 53% and extended a mandatory offer that was unreasonable and unfair.

Tongs did not hit >90% at close of offer and since they have every intention to restore free float if they didn't trigger CA, the offer period is expectedly not extended.

The unreasonable and unfair offer has however garnered a large stake of 33.7% or 72% of outstanding shares (33.7%/47%). Tongs now own close to 87% of this holding company with one business. The majority of minorities have folded and free float has been reduced multi-fold. So will this turn out to be like a F&N and Fraser Property sort of situation? 

If the company intends to acquire new businesses in the future and needs capital, it can't do a rights issue as it probably may lose free float after the rights. A share placement via a security agent isn't cheap (for its scale) while a direct share issue to another tycoon is another possibility. Nonetheless, this whole exercise has given me another good eagle view on how tycoons make money.

CLOSE OF OFFER FINAL LEVEL OF ACCEPTANCES OF OFFER

Accordingly, as at 5.30 p.m. (Singapore time) on 27 December 2024, the total number of (a) Shares owned, controlled or agreed to be acquired by the Offeror and persons acting in concert with it; and (b) valid acceptances of the Offer, amount to an aggregate of 787,353,453 Shares, representing approximately 86.68%1 of the total number of Shares.

https://links.sgx.com/FileOpen/Close_of_...eID=829094

[ksir]

Wow, this gotta be significant for Avarga:
BURNABY, BC , May 27, 2025 /CNW/ - Taiga Building Products Ltd. ("Taiga" or the "Company") announced today a special dividend of $1.6675 CDN per common share of the Company to be paid on June 23, 2025 to holders of record of common shares on June 6, 2025 .

Withholding tax is 15% I think, but even so, still a huge cash flowing in to Avarga!

[weijian]

Wow, this gotta be significant for Avarga:
BURNABY, BC , May 27, 2025 /CNW/ - Taiga Building Products Ltd. ("Taiga" or the "Company") announced today a special dividend of $1.6675 CDN per common share of the Company to be paid on June 23, 2025 to holders of record of common shares on June 6, 2025 .

Withholding tax is 15% I think, but even so, still a huge cash flowing in to Avarga!

hi ksir,

After your own stake has increased by 150% (33% stake to 87%), it is probably a no brainer to declare more money upwards. With more cash proceeds from its 2 other divestments, cash is overflowing for Tong Junior to try out his luck in emulating the old man.

[ksir]

Wow, this gotta be significant for Avarga:
BURNABY, BC , May 27, 2025 /CNW/ - Taiga Building Products Ltd. ("Taiga" or the "Company") announced today a special dividend of $1.6675 CDN per common share of the Company to be paid on June 23, 2025 to holders of record of common shares on June 6, 2025 .

Withholding tax is 15% I think, but even so, still a huge cash flowing in to Avarga!

hi ksir,

After your own stake has increased by 150% (33% stake to 87%), it is probably a no brainer to declare more money upwards. With more cash proceeds from its 2 other divestments, cash is overflowing for Tong Junior to try out his luck in emulating the old man.

Hi weijian,

If it's no brainer, I reckon alot of ppl (including you) did buy alot of Avarga to align your move with Tongs 

Honestly, I don't really care what mr markets did, ie: (ex)shareholders sold to Tongs or Taiga's (ex)shareholder sold 2+% to Avarga just a month back.   

I'm more into the attractiveness of their valuation (price is what you pay, value is what you get). 
It just happened that I reallocated alot from Avarga to Taiga back then when Taiga was below S$1 and Avarga was ehmm S$0.2++ (before share conso), Taiga was just cheap compared to Avarga. 
I reallocated back to Avarga when its price still S$0.2 and yet Taiga C$3++

My decision mainly due to valuation and opportunity cost of holding which at any point of time.
Is the result far better after the reallocation? I never really count, but I guess it's satisfactory.

I'd love for Taiga to use up the capital to expand (and not wasting $ on dividend tax), but guess the available opportunity for Taiga is not attractive, it's wise for them to throw the cash out to Avarga. SG or Asia markets are more attractive. More opportunity for Avarga to make good use of capital. If still can't, Avarga can throw out some dividend as well (and with no tax).

[ksir]

Just a very rough calculation on the dividend:
Taiga Dividend: C$1.6675
Assuming: 15% tax, exchange rate 0.93 -> S$1.3181
Avarga owns 74.2% of Taiga, dividend expected to be received by Avarga is around S$105M, let's assume S$100M.
At price of S$2.8, total shares 90.8M, Avarga's Market cap is around S$254M.
The dividend from Taiga is around 39% of Avarga markep cap.

Let's assume either:
1) They fully deploy the S$100M to acquire a new business, reckon it has to be a very attractive one since they bitten the 15% tax bullet, perhaps already got a target (speculation only, I don't have any insiders info, I'm just an ikan bilis shareholder). I do hope the target is a great biz or at least as good as Taiga and not the cigar butt biz (cheap valuation, lousy ROE type).
2) They throw out 30% of the S$100M to shareholders, that is about 13% dividend yield.
Another 70% throw back to acquire good biz or just to build an ikan bilis bershire portfolio, I am happy with that as well.

On the other hand, this is NOT in addition of the above:
At Taiga current price of C$4.75, its market cap is about S$472M.
Avarga portion of that is S$350M or S$3.85 per share.
I do think the discount is worth my effort to reallocate my Taiga to Avarga, which I did, but not fully yet.

[weijian]

Wow, this gotta be significant for Avarga:
BURNABY, BC , May 27, 2025 /CNW/ - Taiga Building Products Ltd. ("Taiga" or the "Company") announced today a special dividend of $1.6675 CDN per common share of the Company to be paid on June 23, 2025 to holders of record of common shares on June 6, 2025 .

Withholding tax is 15% I think, but even so, still a huge cash flowing in to Avarga!

hi ksir,

After your own stake has increased by 150% (33% stake to 87%), it is probably a no brainer to declare more money upwards. With more cash proceeds from its 2 other divestments, cash is overflowing for Tong Junior to try out his luck in emulating the old man.

Hi weijian,

If it's no brainer, I reckon alot of ppl (including you) did buy alot of Avarga to align your move with Tongs 

hi ksir,

Just let me clarify below:

(1) I looked at Avarga a few years ago and gave it a pass. If there would (ever) had been an investment, it would only be Taiga since an OPMI would be positioned in a manner where a Taiga shareholder gets paid first before an Avarga shareholder does (if ever).

(2) "No brainer" doesn't mean you need to participate, especially when there are so many other opportunities around. My focus on spending time on Avarga is really to mainly learn from Tong Senior, with the faith that it will come in to be very useful elsewhere.