Winas (formerly: Sinwa Limited)

[ghchua]

Why not do it now together with the other entities and saved the effort later? And if say he has the intention to do some re engineering of the shell company before selling it at a later date, presumably for a higher price, then is it not better to hold on to the shares now and see what is his game plan?

I think for those who believe that he can sell the shell company at above book value (like in the Chew's Group case study), then obviously it is worthwhile holding a little bit longer. But as cif5000 as stated, after the sale, the company will be classified as a cash company by SGX. Therefore, the time frame might be an issue to find a buyer for the shell.

[pianist]

Huh sounds really kelong. I wonder who are the other unnamed other shareholder in that irrevocable list, did these group get special that we are not aware?

[Ben]

I think for those who believe that he can sell the shell company at above book value (like in the Chew's Group case study), then obviously it is worthwhile holding a little bit longer. But as cif5000 as stated, after the sale, the company will be classified as a cash company by SGX. Therefore, the time frame might be an issue to find a buyer for the shell.

Agreed. So he cannot just sit there and do nothing as the clock is clicking after the deal. I think SGX will force the company to delist if it does not have a viable business after x years, can someone confirm this? Thanks.

My personal speculation is that Mike might want to take the company private. Once the deal is completed, he can distribute out the extra cash via special dividends, then with the money, take the company private. Then he can do whatever he wants with it. It would be easier to take the company private if it is a shell company. Don't forget Mike had a brush with the regulator few years ago, so he may not be keen to continue the listing status.

[weijian]

I think for those who believe that he can sell the shell company at above book value (like in the Chew's Group case study), then obviously it is worthwhile holding a little bit longer. But as cif5000 as stated, after the sale, the company will be classified as a cash company by SGX. Therefore, the time frame might be an issue to find a buyer for the shell.

Agreed. So he cannot just sit there and do nothing as the clock is clicking after the deal. I think SGX will force the company to delist if it does not have a viable business after x years, can someone confirm this? Thanks.

My personal speculation is that Mike might want to take the company private. Once the deal is completed, he can distribute out the extra cash via special dividends, then with the money, take the company private. Then he can do whatever he wants with it. It would be easier to take the company private if it is a shell company. Don't forget Mike had a brush with the regulator few years ago, so he may not be keen to continue the listing status.

Hi Ben,
According to the PR from Sinwa on the disposal, it will become a cash company defined under listing rule 1018. So i took a look at the listing rule 1018 and it seems like once it becomes a cash company (ie. transaction is completed), it then has 12 months' to do something with the possibility to ask for 6 months extension if it needs more time to carry out its plans. If not, SGX will "force" them to give an exit offer.

http://rulebook.sgx.com/en/display/displ...30&print=1

You only want to take a company private, if you are paying 50cents for a dollar's worth. A shell company is definitely not worth 50cents for a dollar's worth kind, to an owner. However, it will be useful to someone who wants to get into the public markets fast (with less scrutiny) and so i suspect ghchua's scenario of this becoming like Chew's Group is the most likely. I don't have a good read of Towkay Sim's track record/character but as OPMIs, we need to always stay skeptical to protect ourselves, and hence we cannot forget what has happened at Datapulse. Towkay Sim has ~40+% of the company and hence he cannot sell all at once though (or else trigger a mandatory GO).

[tiongkokgor]

Extract from terms of disposal:

4.2.7 the entry by Tan Lay Ling into a service agreement on remuneration terms not less 
favourable than her existing service agreement and a re-investment agreement with 
the Purchaser, each on terms to be agreed between Tan Lay Ling and the Purchaser;

What is a RE-INVESTMENT agreement?

[Ben]

Thanks Weijian and ghchua for your insight and info.

I didn’t follow Chew’s case closely, but in essence, what I am saying and what ghchua is saying is quite similar. That the end game is to sell, or delist the shell company once the proposed deal is completed. So if indeed they are following the chew’s case, SH can expect a special dividend sometimes in the future, then another distribution once the shell company is finally offloaded.

Probably only Boss Sim knows the true value of the shell company better than anyone else. And since it is a shell company, most investors will probably discount its value, which makes it more attractive for Boss Sim to take it private. Of course, the big assumption is Boss Sim wants to take it private. Based on the fact that he owns about 40% of the company, it is not a remote possibility.

I have been a faithful follower of Sinwa for many years, and must say Boss Sim has not disappoint me all these time. So I am going to place my little trust on him for a little longer. Ships supplies and logistic is not a glamorous business and it’s very competitive, thought it can be stable and profitable if done right. Sinwa is an illiquid counter and the company does not need to raise money from the market. So all these pointed to a possibility that Boss Sim might want to take it private and has the freedom to manage the company on his own terms.

The final chapter could be the most interesting, like in Chew’s case.

[ghchua]

Hi Ben,

There is a bit of difference here. Allow me to explain why.

If you said that Boss Sim intention is to take the company private, then he should not have done this deal in the first place. He could have just taken the whole Sinwa private himself and then sell the company after it had been delisted to another party.

The fact that he had sold the business of the company instead and left it with a shell meant that his intention is really not to take Sinwa private. His intention is to sell the company. But because he could not do it via a general offer, delisting etc as there might be an uncertainty that minorities might not bite, he got to structure it the current way to sell the whole business to a buyer. After that, then he can see how he can market and sell the shell. I don't think it is his intention to delist and take the shell company private, because an unlisted shell company have no value at all, except for its cash value. The value of a shell company is its listing status. Without its listing status, a shell company is not attractive.

Then the question is how to make a listed shell company attractive? Well, you got to leave some cash in the company for the buyer of the listed shell to do business. How much cash needs to be in the shell? It really depends on what is the intention of the buyer and how much money they intend to put in.

Sinwa's listing status is definitely more attractive than Chew's Group since it is listed on Main Board while Chew's Group is listed on Catalist. The buyer of Chew's Group paid around 22.5% premium over the RNAV of the company. That is the benchmark that we should be looking at.

[BlueKelah]

Next few years not good for oil lah, will impact their business so quickly sell off the oil part, then cash company boss is like whatever lah, no one want the leftover then delist loh. Imho no point holding on liao. Was waiting for big dip to buy in but now remove from radar.

[karlmarx]

Since the offer is made by a third party, it is a demonstration that the market has in the past been quite efficient in pricing Sinwa's trading business. A reality check for those holding shares of similar business models.

As mentioned by fellow VBs, there is probably more value for holders of Sinwa shares if they are willing to wait. Yet, if Sinwa shareholder are willing to take a smaller profit by selling in the market now, there is the opportunity to re-invest during this 'black friday/11.11' sale period.

[Young Investor]

Since the offer is made by a third party, it is a demonstration that the market has in the past been quite efficient in pricing Sinwa's trading business. A reality check for those holding shares of similar business models.

As mentioned by fellow VBs, there is probably more value for holders of Sinwa shares if they are willing to wait. Yet, if Sinwa shareholder are willing to take a smaller profit by selling in the market now, there is the opportunity to re-invest during this 'black friday/11.11' sale period.

Karlmarx

What will be the amount of cash Sinwa will end up with after the exercise?

Thank you.