Dutech Holdings

[RC22SG]

Question - given the current situation, i.e. the offeror has got ~79% acceptance, excluding the 8+% owned by Droedge and 6+% owned by Robert, the remaining liquidity is already less than 10%, right? In that case, the shares of Dutech meets the criteria for suspension if the company chooses to do so.. is that correct?

Guess two ways to interpret this - 1) OMG, if I don't surrender my shares then I will probably be locked up for a unpredictable period of time... or 2) now it is the last chance/window to buy into Dutech at such a cheap price and become a private shareholder of the company..

Is my understanding correct?

[ghchua]

If Dr Johnny Liu and Dr. Hedda Juliana im Brahm-Droege and Robert Stone has agreed on a final settlement price (if higher than 43.5c) for their respective blocks of shares, then by the above requirement, the Offeror has to increase the existing cash offer.  This is the outcome that all of us are looking forward to.

There is legal implications to this. They have already said that 43.5cts offer price is final.

[ghchua]

Question - given the current situation, i.e. the offeror has got ~79% acceptance, excluding the 8+% owned by Droedge and 6+% owned by Robert, the remaining liquidity is already less than 10%, right? In that case, the shares of Dutech meets the criteria for suspension if the company chooses to do so.. is that correct?

Guess two ways to interpret this - 1) OMG, if I don't surrender my shares then I will probably be locked up for a unpredictable period of time... or 2) now it is the last chance/window to buy into Dutech at such a cheap price and become a private shareholder of the company..

Is my understanding correct?

Unless the IFA deemed the revised offer price of 43.5cts as "fair and reasonable", there is no way that Dutech can be delisted from SGX if they could not hit compulsory acquisition level of 90%. So, you would not be a shareholder of a unlisted company even if the stock is suspended after the offer closes due to insufficient free float.

If the offer reaches 90% acceptance, then sorry. They will exercise their rights to compulsory acquire your shares at 43.5cts per share and then delist the company.

We can talk about what happens after this offer closes (if they could not secure 90% and the stock is suspended) later, but we must get through this GO first.

[mslee888]

Question - given the current situation, i.e. the offeror has got ~79% acceptance, excluding the 8+% owned by Droedge and 6+% owned by Robert, the remaining liquidity is already less than 10%, right? In that case, the shares of Dutech meets the criteria for suspension if the company chooses to do so.. is that correct?

Guess two ways to interpret this - 1) OMG, if I don't surrender my shares then I will probably be locked up for a unpredictable period of time... or 2) now it is the last chance/window to buy into Dutech at such a cheap price and become a private shareholder of the company..

Is my understanding correct?

Unless the IFA deemed the revised offer price of 43.5cts as "fair and reasonable", there is no way that Dutech can be delisted from SGX if they could not hit compulsory acquisition level of 90%. So, you would not be a shareholder of a unlisted company even if the stock is suspended after the offer closes due to insufficient free float.

If the offer reaches 90% acceptance, then sorry. They will exercise their rights to compulsory acquire your shares at 43.5cts per share and then delist the company.

We can talk about what happens after this offer closes (if they could not secure 90% and the stock is suspended) later, but we must get through this GO first.

Hi GH, are you able to advise me what are independent shareholders? Are significant shareholders  those >5% considered independent?)...if the offeror receives, as at the closing date, valid acceptances of the offer from Shareholders (other than persons acting in concert with the offeror) (the "independent shareholder") representing at least 75% of the total number of shares held by the Independent shareholders and subject to substantive compliance with the other requirements set out in the Voluntary Delisting Rules, the offeror intends to seek the SGX-ST's waiver from strict compliance with such Voluntary Delisting Rules....are there any implications to this that we should be aware of? Thanks!

[RC22SG]

Question - given the current situation, i.e. the offeror has got ~79% acceptance, excluding the 8+% owned by Droedge and 6+% owned by Robert, the remaining liquidity is already less than 10%, right? In that case, the shares of Dutech meets the criteria for suspension if the company chooses to do so.. is that correct?

Guess two ways to interpret this - 1) OMG, if I don't surrender my shares then I will probably be locked up for a unpredictable period of time... or 2) now it is the last chance/window to buy into Dutech at such a cheap price and become a private shareholder of the company..

Is my understanding correct?

Unless the IFA deemed the revised offer price of 43.5cts as "fair and reasonable", there is no way that Dutech can be delisted from SGX if they could not hit compulsory acquisition level of 90%. So, you would not be a shareholder of a unlisted company even if the stock is suspended after the offer closes due to insufficient free float.

If the offer reaches 90% acceptance, then sorry. They will exercise their rights to compulsory acquire your shares at 43.5cts per share and then delist the company.

We can talk about what happens after this offer closes (if they could not secure 90% and the stock is suspended) later, but we must get through this GO first.

Probably my thinking was one step ahead. When the trading is suspended to me it is effectively a private company even though I can still see their reporting. 

I cannot agree that considering the risk of the trading get suspended is too early at this stage, as it definitely would affect people's decision now - whether they would leg go the shares at the updated price of 43.5c

[weijian]

@yoyo, I tend to agree with ghchua that the price will not be revised after they have stated it. If they revise or made purchases above the offer price, they would have breached Rule 20.1 of Takeover Code. This did happen a couple of years ago from OSIM. The SIC statement would have been a good summary of what happened, considerations and actions later taken

SIC statement on OSIM: https://www.mas.gov.sg/-/media/MAS/resou...4F68018993


@RC22SG, This is a poker game that the OPMI must learn to play. If one believes there is value to be realized in future, be ready to stay in the game, else one gets flushed out early on. A business continues to grow whether it is listed or not - and the person who can suffer illiquidity might just be paid an eventual premium. This is also why Buffett espouses buying and then forgetting about your stocks.

[ghchua]

Hi GH, are you able to advise me what are independent shareholders? Are significant shareholders  those >5% considered independent?)

Independent shareholders are those shareholders that are independent of the offeror. Therefore, though shareholders like Droege Group (8.8%) and Robert Stone (6.47%) are substantial shareholders holding more than 5% of the shares, they are not related to nor acting in concert with the offeror. Therefore, they are considered as independent shareholders.

...if the offeror receives, as at the closing date, valid acceptances of the offer from Shareholders (other than persons acting in concert with the offeror) (the "independent shareholder") representing at least 75% of the total number of shares held by the Independent shareholders and subject to substantive compliance with the other requirements set out in the Voluntary Delisting Rules, the offeror intends to seek the SGX-ST's waiver from strict compliance with such Voluntary Delisting Rules....are there any implications to this that we should be aware of? Thanks!

In short, there is not much implications except for maybe a long period of suspension due to insufficient free float. Why? Do allow me to explain more.

With the offeror and concerted parties holding around 58.54% of the shares, they must garner at least 75% of the remaining 41.46% (100%-58.54%) of the shares out there from independent shareholders to seek voluntary delisting. Which means, they must secure 58.54%+(0.75x41.46%) = 89.635% of the shares out there. Which is quite close to the 90% compulsory acquisition level and I believe they could have achieved compulsory acquisition level by extending the offer closing date further with such a tight margin.

Further, one must remember that even if the offer closes with the offeror securing only 89.635% of the shares and decides to seek voluntary delisting plus waiver of compliance of rules imposed on voluntary delisting (which includes holding a EGM to propose a delisting resolution to shareholders) based on at least 75% of the total number of shares held by the Independent shareholders had accepted the offer, they will most likely to be rejected by SGX unless the IFA deemed the voluntary delisting exit offer price as being "fair and reasonable".

Which is why the IFA opinion on the revised offer price of 43.5cts becomes very important now. If the IFA deemed this revised offer price as being "not fair and reasonable" again, there is no reason why the same voluntary delisting exit offer price being tabled for delisting so soon after the offer closes would be deemed "fair and reasonable" by the IFA, thereby disrupting their voluntary delisting wavier application.

Hope that the above clarifies.

[ghchua]

Probably my thinking was one step ahead. When the trading is suspended to me it is effectively a private company even though I can still see their reporting. 

Hi RC22SG,

I think we have to get the definitions clear first before I engage you further. Feel free to disagree with me, because I engage based on facts and definitions in order not to confuse other forumers.

A stock that is suspended but listed on SGX is not a private company. It is still a listed company and will have to abide by listing rules on SGX Listing Manual.

A stock that had been delisted from SGX with public shareholders is an unlisted public company.

In both instances, these are not private companies.

[Yoyo]

Hi ghchua and weijian

Many thanks for your sharing.  Agreed the offer price is unlikely to be further revised given that it is stated as final.  Incurred some small transactional costs today, but net gainful, particularly on better understanding of the Takeover situation - a valuable learning experience.

Hi Shiyi
Please note that I am wrong in #220 as I do not understand the implication of "No increase statements" under the Takeover Code.

[mslee888]

Hi GH, thanks for the clear and detailed explanation. Much appreciated.