Boustead Projects

[¯|_(ツ)_/¯]

I must declare that I'm not very good at stock valuation and my reasons might not be meaningful to you.

Without consideration of dividend, my gain in BP is about 50%.  Including dividend, my gain would be about 70%.

Somehow, I felt that continue to hold BP could still enjoy whatever profits/dividend that it gives out.  Well, I think BP should continue to do well and continue to distribute dividend.  

I might be wrong thou.

Since K mentioned that valuation wise BS is better than BP, then it will make sense to do the switch. 

May be I will consider it later but at this moment, I just let it be.

Gratitude. 

[dreamybear]

I believe fellow shareholders might have received emails and phone call regarding the Exit Offer, like myself. There hasn't been many updates in SGX announcements regarding the acceptance % and I am starting to wonder if there will be sufficient acceptances for compulsory acquisition to take place.

Wld things have turned out differently if
- the first BP offer price was fair and reasonable ?
- or the latest offer price was at the highest price range of $1.42 (e.g. minorities might think max value has been extracted and thus accept) ?

Oh well, like investors, perhaps sometimes, mgmt have to think in bets too !

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interesting read from BSL EGM :

https://links.sgx.com/FileOpen/Boustead%...eID=780384
"Would it be unfair that the three major shareholders now seek to be paid the exit offer price of S$1.18 (“Exit Offer Price”) when all the former BPL minority shareholders only received S$0.95 per BPL share ?"

[weijian]

I will put BSL's EGM MoM into child BPL's thread as it chronicles back to the initial listing of BPL in 2015.

To recap, BPL was listed by way of introduction after parent BSL decided to demerge it. 48.8% of BPL was distributed as dividend in specie to BSL shareholders, while BSL continued to hold onto the remaining 51.8%. With majority ownership even after demerge/listing, BSL was able to continue the consolidation of BPL's P/L and balance sheet onto its own.

So rather than a "clean break" where the entire BPL is distributed to shareholders, it became a tripartite scenario - BSL (biggest shareholder which is a company), FF Wong and family (controlling shareholder of BSL) and minorities. This has created a situation of possible/various conflict of interests as what has happened in the last 12 months.

On hindsight, would a "clean break" had been better? A clean break could have been (1) distributing ALL of BPL to shareholders, followed by an IPO, or (2) Selling a portion of BPL via IPO to raise some funds and then distribute remaining to BSL shareholders.

A clean break would have truly made BPL "independent" per say? And this clean break, often could have attracted outside 3rd parties to eventually consider/offer to buy BPL in its entirety? Based on a few examples from my head - LHN Logistics from LHN Group, Xinghua Port Holdings from Pan United..these subsidiaries with "clean breaks" were eventually sold to 3rd parties. Value creation was then fully realized.

But maybe regardless of how it is done, BPL can never fully break from BSL due to its importance in terms of earnings, transferability of resources between BSL's different BUs and the future transformation to an "asset light" model.

MINUTES OF THE EXTRAORDINARY GENERAL MEETING OF BOUSTEAD SINGAPORE LIMITED

The key reasons for the demerger included:
• unlocking shareholders’ value through a separate valuation; and
• financial independence and direct access to capital markets for BPL

The BPL Board and management worked extremely hard and delivered a true value-unlocking moment with the successful launch of the Boustead Industrial Fund on 4 March 2021, which led to a record BPL net profit for FY2021 of S$131.7 million during the pandemic and a record BPL dividend of 14.5 cents per share. The BPL share price responded well for a short period and peaked cum dividend, but thereafter collapsed ex-dividend despite the real value creation that took place.

From that point onwards, there was a downtrend in the BPL share price, in spite of announcements on 5 May 2022 of the successful creation of a second real estate fund in Vietnam, and on 18 July 2022, of a record S$300 million engineering and construction contract. From August 2021, shortly after the ex-dividend share price collapse until December 2022, the Company began to acquire shares from the open market through multiple transactions to increase its stake in BPL.

Throughout BPL’s entire listed life, trading liquidity was thin until the Company launched the VGO. There were 136 market days with zero trades and not a single new substantial shareholder could be attracted into the shareholder register despite the real value creation that took place.

https://links.sgx.com/FileOpen/Boustead%...eID=782710

[weijian]

It seems like 0.55% of shares will be going private. For context, at the close of the 1st offer which did not achieve both fair and reasonable, 4.51% of shares were outstanding.

In the 2nd offer (exit offer), 0.55/4.51 = 12% of outstanding shares decide to go private. That is not a small sum. Since parent is listed, the subsidiary will also be pretty transparent even though it is not. Nonetheless, it is impressive to see this % of shares of OPMIs with an "able to suffer illiquidity" mentality. I, for one will definitely sell out so that I can deploy the proceeds to other areas (eg. even in the parent BSL if I think BP still has good prospects).

EXIT OFFER IN CONNECTION WITH DIRECTED DELISTING OF BOUSTEAD PROJECTS LIMITED CLOSE OF EXIT OFFER AND DELISTING

As stated in the Close of Exit Offer Announcement:
(a) the Exit Offer has closed at 5.30pm (Singapore time) on 26 January 2024 (the “Closing Date”). Accordingly, the Exit Offer is no longer open for acceptance and any acceptances received after the close of the Exit Offer will be rejected; and

(b) as at 5.30pm (Singapore time) on the Closing Date, the total number of (i) Shares owned, controlled or agreed to be acquired by the Offeror and parties acting in concert with it, and (ii) valid acceptances of the Exit Offer, amount to an aggregate of 311,524,742 Shares, representing approximately 99.45% of the total number of Shares

https://links.sgx.com/FileOpen/BP-Announ...eID=784058

[donmihaihai]

It seems like 0.55% of shares will be going private. For context, at the close of the 1st offer which did not achieve both fair and reasonable, 4.51% of shares were outstanding.

In the 2nd offer (exit offer), 0.55/4.51 = 12% of outstanding shares decide to go private. That is not a small sum. Since parent is listed, the subsidiary will also be pretty transparent even though it is not. Nonetheless, it is impressive to see this % of shares of OPMIs with an "able to suffer illiquidity" mentality. I, for one will definitely sell out so that I can deploy the proceeds to other areas (eg. even in the parent BSL if I think BP still has good prospects).

About 1.7M shares (valued at just over 2M) held out. Not a lot, actually. 

There are ways to force out minority shareholders. I have been forced out before, and I was quite happy to receive the cash because I learned something.

[ghchua]

There are ways to force out minority shareholders. I have been forced out before, and I was quite happy to receive the cash because I learned something.

Hi donmihaihai,

There are many cases whereby companies forced out remaining minority shareholders via selective capital reduction after delisting. Examples that I could remember include Wheelock Properties, Keppel Land and Auric Pacific. Minorities will still have to "play ball" to stop all these corporate activities if they wish to hold onto their shares after delisting.

Anyway, if it is only a small portion of your portfolio, I think you should just accept the offer and move on. After all, you can't easily add onto your unlisted companies and they will just be there and waiting for the final buyout in future.

[donmihaihai]

There are ways to force out minority shareholders. I have been forced out before, and I was quite happy to receive the cash because I learned something.

Hi donmihaihai,

There are many cases whereby companies forced out remaining minority shareholders via selective capital reduction after delisting. Examples that I could remember include Wheelock Properties, Keppel Land and Auric Pacific. Minorities will still have to "play ball" to stop all these corporate activities if they wish to hold onto their shares after delisting.

Anyway, if it is only a small portion of your portfolio, I think you should just accept the offer and move on. After all, you can't easily add onto your unlisted companies and they will just be there and waiting for the final buyout in future.

Yes capital reduction but not sure about the selective part. Or my interpretation of selective is the same as your as any capital reduction has to apply to all shareholders. 

Did not write it because I have not read about it anywhere and co. Will pay good money to get advice like this.

[weijian]

hi ghchua,

Since there are no different classes of BP shares, corporate actions should be applied for all shares. Would you be able to elaborate further on this "selectivity" part, if you are comfortable with educating us in a public forum? It would be well appreciated by many of us here, especially folks like me who do not have much (or zero) experience with holding unlisted shares.

The only thing i can suggest off my head, is share issuance to the controlling shareholder, which will further dilute minorities and there are not a lot of safeguards when you are unlisted. But then again, the current minorities' holdings are considered miniscule to start with.

[ghchua]

Hi donmihaihai and weijian,

A selective capital reduction under section 78G of the Companies Act, where all the shares held by the minority shareholders will be cancelled, with a sum constituting part of the total paid-up share capital of the target company being cancelled and returned to the minority shareholders.

Well. I think the case study of Keppel Land will make a good example. The details are actually in SGX announcements, though Keppel Land was delisted as Keppel Corp made those annoucements. I will provide the link below:

Keppel Land proposes selective capital reduction. Participating Shareholders will receive S$4.24 for each share cancelled if the proposal is approved by at least 75% of all shares voted by shareholders present and voting at the upcoming EGM and Court Approval is obtained.
https://links.sgx.com/1.0.0/corporate-an...7e16a09577

[donmihaihai]

Thank you ghchua

Section 78G of the Companies Act which talk about capital reduction has nothing selective there, however, what Keppel Land sought was a selective reduction.

Reduction by special resolution subject to Court approval
78G.—(1) A company limited by shares may, as an alternative to reducing its share capital under section 78B or 78C, reduce it in any way by a special resolution approved by an order of the Court under section 78I, but the resolution and the reduction of the share capital do not take effect until —
(a) that order has been made;
(b) the company has complied with section 78I(3) (lodgment of information with Registrar); and
© the Registrar has recorded the information lodged with him or her under section 78I(3) in the appropriate register.
(2) [Deleted by Act 36 of 2014]