Boustead Projects

[EnSabahNur]

If I remember correctly, you hold some shares in unlisted companies, could share the main differences? Aside from the obvious no-trade in stock exchange.

Hi ksir,

I think the main difference is really, information flow is not there. Unlike listed companies whereby they made announcements when there is a need to be made under the listing rules, unlisted companies will possibly send you an audited financial statement yearly and notice of AGM/EGM. No annual report. That's about it.

Also, do take note that unlisted companies are not required to disclose their corporate governance practices. They will also likely not to have any independent directors on board.

Will the majority owner have a free hand to take any actions without putting it to a vote?

For example, carry out interested party transactions without an EGM, and being forced to abstain from the vote?

[ghchua]

Will the majority owner have a free hand to take any actions without putting it to a vote?

For example, carry out interested party transactions without an EGM, and being forced to abstain from the vote?

There is some safeguards under the Companies Act with respect to that. That a director must disclose conflict of interest and act honestly. I don't think they need an EGM for voting. That is specifically for listed companies only under IPTs for listing rules. Rather, for unlisted companies, it is for the board to review those transactions and approve them. They have to also disclose them in the financial statements.

[ksir]

Will the majority owner have a free hand to take any actions without putting it to a vote?

For example, carry out interested party transactions without an EGM, and being forced to abstain from the vote?

There is some safeguards under the Companies Act with respect to that. That a director must disclose conflict of interest and act honestly. I don't think they need an EGM for voting. That is specifically for listed companies only under IPTs for listing rules. Rather, for unlisted companies, it is for the board to review those transactions and approve them. They have to also disclose them in the financial statements.

Appreciate your sharing, ghchua, thanks.
From your experience so far with unlisted companies, any incidents/ issues/ challenges that you encountered so far? 
Given a choice, would you still choose to stay with unlisted co or just get out (ie: the hassles outweigh the benefits!)?

IMHO, unless you're a fund or substantial shareholder in the company and hence sitting in the board, it's quite a huge disadvantage to invest in unlisted company.
Considering we are relying the Management integrity and it's not great to start with, any conflicts, likely only 2 ways out: via court or sell out (selling I bet would be a big challenge also).

Weijian, to me BP is far undervalued (with its potential future earning) than Boustead. Reason why it's about 50-50? Perhaps same as FF Wong, I own Boustead x shares and gotten y shares of BP from boustead, then I added more & more shares of BP while Boustead stay the same. Why not switching? Too lazy I guess! both are cheap. haha.

[heyjojos]

I’m confused with some of the conversations here. If BP is not able to garner more than 90% shares, they won’t be able to unlist from SGX right? Is my understanding wrong?

[ghchua]

Appreciate your sharing, ghchua, thanks.
From your experience so far with unlisted companies, any incidents/ issues/ challenges that you encountered so far? 
Given a choice, would you still choose to stay with unlisted co or just get out (ie: the hassles outweigh the benefits!)?

I think it is a difficult choice to make. Ultimately, it still depends on whether you trust the controlling shareholder running the company. I have encountered unlisted companies giving out dividends yearly after delisting, and also not paying any dividends at all.

As I have said before, one of the challengers is really the information flow is not there. And also, you cannot transact those shares easily. For example, if you want to add more into that unlisted position as you like it as time goes by, it is difficult. Similarly for selling.

The challengers are even worse for unlisted companies not incorporated in Singapore. AGMs are likely to be conducted outside Singapore and they are not subjected to Singapore Companies Act.

[ghchua]

I’m confused with some of the conversations here. If BP is not able to garner more than 90% shares, they won’t be able to unlist from SGX right?  Is my understanding wrong?

Hi heyjojos,

Maybe I could refer you to their offer announcement before we discuss further.

6.2 Offeror’s Intentions. It is the intention of the Offeror to privatise the Company and delist the Company from the SGX-ST, should the option be available to the Offeror. In the event that the trading of Shares on the SGX-ST is suspended pursuant to Rule 724, Rule 1105 or Rule 1303(1) of the Listing Manual, the Offeror has no intention to undertake or support any action for any such trading suspension by the SGX-ST to be lifted. In addition, the Offeror reserves the right to seek a voluntary delisting of the Company from the SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual.

So, there are two parts in this, the General Offer that they have launched and voluntary delisting. If they can make it under the General Offer, they will delist. Otherwise, they reserve the right to pursue voluntary delisting.

To delist via General Offer, the offeror do not need to garner more 90% of the shares that they do not own. Let's get this clear first. 90% threshold is for compulsory acquisition. To delist via General Offer, the offeror will need to get a "Fair and Reasonable" opinion from the IFA plus 75% of the shares held by independent shareholders at the close of the offer. So, let's say they cannot get 75%, what's next? They reserve the right to seek step 2, which is voluntary delisting.

For voluntary delisting, again, the IFA opinion needs to be "Fair and Reasonable" and there will be a EGM for shareholders to cast their votes. For it to be carried, they must secure 75% of the independent shareholders present and voting. If you don't vote, you will not be counted towards the vote count.

Hope that the above clarifies.

[heyjojos]

I’m confused with some of the conversations here. If BP is not able to garner more than 90% shares, they won’t be able to unlist from SGX right?  Is my understanding wrong?

Hi heyjojos,

Maybe I could refer you to their offer announcement before we discuss further.

6.2 Offeror’s Intentions. It is the intention of the Offeror to privatise the Company and delist the Company from the SGX-ST, should the option be available to the Offeror. In the event that the trading of Shares on the SGX-ST is suspended pursuant to Rule 724, Rule 1105 or Rule 1303(1) of the Listing Manual, the Offeror has no intention to undertake or support any action for any such trading suspension by the SGX-ST to be lifted. In addition, the Offeror reserves the right to seek a voluntary delisting of the Company from the SGX-ST pursuant to Rules 1307 and 1309 of the Listing Manual.

So, there are two parts in this, the General Offer that they have launched and voluntary delisting. If they can make it under the General Offer, they will delist. Otherwise, they reserve the right to pursue voluntary delisting.

To delist via General Offer, the offeror do not need to garner more 90% of the shares that they do not own. Let's get this clear first. 90% threshold is for compulsory acquisition. To delist via General Offer, the offeror will need to get a "Fair and Reasonable" opinion from the IFA plus 75% of the shares held by independent shareholders at the close of the offer. So, let's say they cannot get 75%, what's next? They reserve the right to seek step 2, which is voluntary delisting.

For voluntary delisting, again, the IFA opinion needs to be "Fair and Reasonable" and there will be a EGM for shareholders to cast their votes. For it to be carried, they must secure 75% of the independent shareholders present and voting. If you don't vote, you will not be counted towards the vote count.

Hope that the above clarifies.

Thanks. That really clarifies.  No where in the document does it say about 75%. This really STINKS big time. I have lost all respect for FF Wong. Like most VB, I’m a long term holder of Boustead and BP.  This sucks as there is no protection for minority shareholders like us. 

Really at a lost now…

[CY09]

heyjojos,

there is, shareholder activism is the answer

Unfortunately in Singapore, minioirty investors are very passive and it results in a culture where independent directors (ID) are voted in and they do not do much to safeguard minority interest in my view. AGMs are important in which shareholders present can vote against the appointment of a ID and voice our concerns. If IDs are aware that their job is at stake, they will be more willing to fight for MI interest and help us to realise our value.

For info, IDs annual pay can range from 20k+ to 100k per job and is not full time, so its a very valuable job

[specuvestor]

It is indeed strange cause MBO use an acquisition vehicle to make the calculation of the 90% more advantageous

Which means they are likely not looking at CA but delisting; I do not know the company well enough if it is to target certain segment of OPMI that are resistant.

On another note just reiterate that no VB here if towkay will go through the hassle of privatisation if there’s no significant discount to fair value of at least ⅓ so we do need to be realistic on the pricing expectation.

Another day another low ball offer!
https://www.sgx.com/mobileapp?action=vie...FZRNLNV8XB

Looking at the NAV, net cash, orderbook & future potential, the offer is kind of a joke!

I reckon Boustead shareholders are the obvious beneficiary of this (if they managed to get some BP shares via this), but otherwise this half-hearted offer price might just get underwhelming response from BP shareholders and waste the resources (times, efforts, money, papers and whatnot)

IMHO, if this is how Boustead treats BP minority shareholders, Boustead minority shareholders have to take note and be aware that they might get the same treatment in future.

Agree... a lowball offer.  The 2022 FY statements has the NAV at $1.25.  $0.90 is 30% below this price.  Suggest minority shareholders to carefully consider before agreeing. 

Trust FF Wong to come up with such stingy offer! Disappointing

Only a little while ago, BP OPMIs were cheering FF Wong for sharing the proceeds of BP's industrial properties' monetization. Of course, OPMIs were astute enough to position themselves at the subsidiary level (ie. BP) to enjoy the child paying up to the parent.

Fast forward to today, things seem to have changed?
FF Wong's stake in Parent: ~43%
FF Wong's direct stake in Child: ~19.3%

The numbers suggest that FF Wong is more incentivized via the Parent and so no surprises - whether is it for upwards payments or low ball offers.

There is nowhere in the offer document that indicates FF Wong will accept the offer. Normally for MBO (or MBO-like) offers, the Mgt as part of the consortium of the Offerer will generally state upfront on their willingness to accept the offer. So what does the absence of this acceptance statement means?

Nothing technically wrong for the Management (ie: BOD) of a company to take care of the benefit of the company they are being fed on (ie: Boustead holding). But it's just a pity if you are trying to acquire your own child company by grossly underpaying. For the very least you could be fair to pay the NAV and benefit from the future potentials (the RNAV, orderbook and future potential of new buildings they acquired and those maturing buildings such as Alice, Razer, ex-IBM etc). 

By not treating the minority shareholders as the partners, it doesn't reflect nicely on the Management. 
Imagine if they were to buy out BIF partners in less than NAV? How would that reflect in the mind of future partners? Badly I'd say.

<invested in Boustead Holding in BP in almost equal portion>

[ksir]

To cut the Management some slacks, I do think in this case doing something is better than nothing!
It is an effort by Boustead Management to scoop up good bargain albeit being cheapo. The BP share price is underappreciated by Investors anyway and Boustead Management saw the opportunity to scoop it up cheaply.

The worst outcome to me is being forced to invest in unlisted co, but other than that I am fine with Boustead doing something about BP depressed share price.

I reckon with BP share price above $0.9, Boustead has to beef up his cheapo bid a bit and paying closer to NAV.
I bet perhaps that could be the intention all along but hey need negotiation tactic, no? Hahaha.
Above purely imagination and for fun, I have zero insider info and never contact BP or Boustead IR.