Accordia Golf Trusts

[Mushy]

Who is the party that has made the non-binding proposal to acquire AGT's golf courses?
Either MBK or someone else. If it is someone else, maybe MBK will be putting up a fight unless they are well rewarded, including the golf assets they had acquired past few years (Accordia and orix). I never know why they wait till now (even 2 years ago when they took accordia) when they were already looking at the whole package even before 2014 IPO of AGT. A change in the business or the environment?

I will not try to estimate the proposed price here as it will surely be revealed shortly when the AGT board engage an adviser and announce the details.
But I am feeling a bit cheated that this happened shortly after they had a downward -20% revaluation of their NAV. A potential flood prevention project by authority was given as reason for the greatly decreased value of a course. Few details were provided.
Overall the business seems stabilized and there are some positive factors due to olympics and golf being an event, and japan boosting tourism through integrated resorts. All these were visible when the units were for sale at 50 to 60c per piece.

[Ray168]

Who is the party that has made the non-binding proposal to acquire AGT's golf courses?
Either MBK or someone else. If it is someone else, maybe MBK will be putting up a fight unless they are well rewarded, including the golf assets they had acquired past few years (Accordia and orix). I never know why they wait till now (even 2 years ago when they took accordia) when they were already looking at the whole package even before 2014 IPO of AGT. A change in the business or the environment?

I will not try to estimate the proposed price here as it will surely be revealed shortly when the AGT board engage an adviser and announce the details.
But I am feeling a bit cheated that this happened shortly after they had a downward -20% revaluation of their NAV. A potential flood prevention project by authority was given as reason for the greatly decreased value of a course. Few details were provided.
Overall the business seems stabilized and there are some positive factors due to olympics and golf being an event, and japan boosting tourism through integrated resorts. All these were visible when the units were for sale at 50 to 60c per piece.

Downgrade 20%? 

In fact the NAV has increase by 7% from Mar 71c to Sep 76c.

[Mushy]

Who is the party that has made the non-binding proposal to acquire AGT's golf courses?
Either MBK or someone else. If it is someone else, maybe MBK will be putting up a fight unless they are well rewarded, including the golf assets they had acquired past few years (Accordia and orix). I never know why they wait till now (even 2 years ago when they took accordia) when they were already looking at the whole package even before 2014 IPO of AGT. A change in the business or the environment?

I will not try to estimate the proposed price here as it will surely be revealed shortly when the AGT board engage an adviser and announce the details.
But I am feeling a bit cheated that this happened shortly after they had a downward -20% revaluation of their NAV. A potential flood prevention project by authority was given as reason for the greatly decreased value of a course. Few details were provided.
Overall the business seems stabilized and there are some positive factors due to olympics and golf being an event, and japan boosting tourism through integrated resorts. All these were visible when the units were for sale at 50 to 60c per piece.

Downgrade 20%? 

In fact the NAV has increase by 7% from Mar 71c to Sep 76c.

Sorry, i used ballpark figure. The actual NAV decrease during that "bad" quarter was 23.7%.
NAV/unit as at 31 Dec 2018 was 0.93SGD (Ref Financial Results for 3Q FY18/19)
NAV/unit as at 31 Mar 2019 was 0.71SGD (Ref Financial Results for 4Q and Full Year FY18/19)
I was referring to this sudden decrease of NAV by 23.7% 3 months later without much explanations. I tried to work out the numbers but could not add up to this amount of 23.7% decrease.

With today's activities, AGT has become 35% of my stocks portfolio, scaring me.

[Mushy]

Can a lowball offer succeed?
The public float had been increasing last 2 years.
Info from AR:
2015 45.9%
2016 41.72%
2017 41.08%
2018 51.2%
2019 58.95%

Back in 2016 agm, I asked one of the directors how much of the trust units are held by Singaporean and Japanese investors. My original intention was to determine why they were hesitant do to currency hedge. He gave me 2 numbers. Singaporean 15%, Japanese 17%. I wonder how much have changed now.

[Mushy]

Parent was supposed to acquire cheap golf courses from outside, turn them around and then sell to the trust to improve distributions for unit holders. Now parent decide to buy back all the good courses from the trust offering a seemingly low price (pending clarity). 


The relationships among the parties involved seems complicated.
The trustee manager has now appointed Daiwa Capital Markets Singapore Limited (DCMSL) as one of the joint financial advisers. 
DCMSL is a subsidiary of Daiwa Securities Group Inc. It is wholly owned by Daiwa International Holdings Inc. Ref from DCMSL website.
From latest AGT annual report 2019, Daiwa Securities Group Inc. (“DSGI”) is listed as a substantial unitholder with deemed interest of 6%.
Can a subsidiary of a substantial unitholder act as independent financial advisor to advise on the sale of all of the golf assets of the golf trust to another substandtial unitholder?

One of the current exe director Mr Toyo Nakanishi has >30 years experience in Daiwa group before joining AGT recently.

[weijian]

Parent was supposed to acquire cheap golf courses from outside, turn them around and then sell to the trust to improve distributions for unit holders. 

hi mushy,
Is there any reason why you think that Parent would be working for the unitholders?

[corydorus]

Parent was supposed to acquire cheap golf courses from outside, turn them around and then sell to the trust to improve distributions for unit holders. Now parent decide to buy back all the good courses from the trust offering a seemingly low price (pending clarity). 


The relationships among the parties involved seems complicated.
The trustee manager has now appointed Daiwa Capital Markets Singapore Limited (DCMSL) as one of the joint financial advisers. 
DCMSL is a subsidiary of Daiwa Securities Group Inc. It is wholly owned by Daiwa International Holdings Inc. Ref from DCMSL website.
From latest AGT annual report 2019, Daiwa Securities Group Inc. (“DSGI”) is listed as a substantial unitholder with deemed interest of 6%.
Can a subsidiary of a substantial unitholder act as independent financial advisor to advise on the sale of all of the golf assets of the golf trust to another substandtial unitholder?

One of the current exe director Mr Toyo Nakanishi has >30 years experience in Daiwa group before joining AGT recently.

Isn't that makes them align to AGT shareholder interests ?

[Mushy]

Parent was supposed to acquire cheap golf courses from outside, turn them around and then sell to the trust to improve distributions for unit holders. Now parent decide to buy back all the good courses from the trust offering a seemingly low price (pending clarity). 


The relationships among the parties involved seems complicated.
The trustee manager has now appointed Daiwa Capital Markets Singapore Limited (DCMSL) as one of the joint financial advisers. 
DCMSL is a subsidiary of Daiwa Securities Group Inc. It is wholly owned by Daiwa International Holdings Inc. Ref from DCMSL website.
From latest AGT annual report 2019, Daiwa Securities Group Inc. (“DSGI”) is listed as a substantial unitholder with deemed interest of 6%.
Can a subsidiary of a substantial unitholder act as independent financial advisor to advise on the sale of all of the golf assets of the golf trust to another substandtial unitholder?

One of the current exe director Mr Toyo Nakanishi has >30 years experience in Daiwa group before joining AGT recently.

Isn't that makes them align to AGT shareholder interests ?

In theory, they should be on the same side as AGT unitholders.
As Daiwa is the controlling shareholder of the trustee manager, it seems they cannot vote on this transaction as trustee manager or as unitholder (see 2019 AR corp governance).
So if it boils down to a vote, the sponsor (28.85%) cannot vote. Daiwa (6%) cannot vote, other than influence through advising.
The only institution i see is hibiki path and it is known they acquired most of their 6.2% stake below 50c/unit.
The 3 independent directors need do their work now as the other 2 exe directors may not be involved in the nego. Hope they are now well back from their year end break.

I guess the sponsor makes this a non-binding proposal, starts with a baseline offer and will proceed to negotiate the terms over the next few months.

I believe the offer or final offer will not be too far from what was initialised. The effective payout for unitholders will simply be what is being announced last Fri. 63,167 million jpy for the holding company = around 70c/unit +/-

Hopes  of third party coming in?
Even though PGM's hostile atempt for the pre-AGT accordia back in 2012/13 was 52% higher than last traded price at that time, it was still well below the net asset value.
https://www.deallawyers.com/blog/2013/01...japan.html

[Mushy]

Parent was supposed to acquire cheap golf courses from outside, turn them around and then sell to the trust to improve distributions for unit holders. 

hi mushy,
Is there any reason why you think that Parent would be working for the unitholders?

I doi not personally believe parent would be working for unitholder as first priority. Does that answer your question?

[Mushy]

This is my summary of the current situation based on the latest clarifications by AGT board and SGX regco stand (see email below).
For details of the relationships and conflict of interests between the various major parties, please see the announcement which I will not copy and paste here to minimise the post.

- AGT board has clarified that the current appointment of DCMSL (and EY) as joint financial advisors at this stage is to assist in evaluation, negotiation, valuation, etc.
- The final proposal will be disclosed to all unitholders. Only then a separate independent financial advisor will be appointed to make a recommendation on the deal.
- As of now with the publicly announced info, SGX regco seems satisfied, as I deduce from their email (below), seemingful no further actions and the fact that the units are allowed to continue to trade.

I have read that for a listed company here, if the sale of assets involve >20% of the NAV, it requires shareholders to vote. I assume it is the same for business trust. I have emailed SGX regco again to enquire on the requirements of such a vote at an EGM. What is the required % of vote to pass. Can the controlling unitholder (28.85%) and Daiwa (5.36%) vote? Any valuebuddies feel free to input.

Lastly, a question. Am I the only unitholder of AGT here?

Dear xx,
 
Thank you for your email.
 
SGX has requested Accordia Golf Trust to provide more clarification in respect of the appointment of Daiwa Capital Markets Singapore Limited as one of its joint financial advisors.
 
You may wish to refer to the company’s announcement on 24 December 2019, linked here for your convenience, for more information. As stated in the announcement, apart from Daiwa Capital Markets Singapore Limited, Ernst & Young Corporate Finance Pte Ltd has also been appointed as another joint financial advisor to assist with the Trust’s evaluation of the non-binding proposal. The Trust has disclosed that the final recommendation of the joint financial advisors to the Board of the Trust will be disclosed to unitholders. In addition, if the Trust proceeds with divestment of the golf courses to its controlling shareholder, an independent financial advisor will be separately appointed and their recommendation to the Audit Committee of the Trust will be disclosed to unitholders in the circular to unitholders.
 
We hope this helps to answer your question.
 
Best Regards,
SGX Regco