Zagro Asia

[opmi]

Is it legal for them to buy cheaper than 0.30 after the announcement to before the egm?

Yes. it is not illegal for them to buy below Offer Price. 

It is also not illegal for them to buy above current Offer Price too. Just that, they have to revise the Offer Price to the highest price bought.

[ZZF]

Is it legal for them to buy cheaper than 0.30 after the announcement to before the egm?

Yes. it is not illegal for them to buy below Offer Price. 

It is also not illegal for them to buy above current Offer Price too. Just that, they have to revise the Offer Price to the highest price bought.

Thanks opmi!

[pianist]

Two or three days there was an article to editor in the business times written by that mr mano, he wrote based on various points that the offer price by pbs was particularly fair and reasonable. I think that may have some influence though I disagree with his points.

[dahuai84]

I respect his opinions, but I disagree with him on many points.

Article by Mr. Mano

Singapore-Exchange-listed Zagro Asia's major shareholder Poh Beng Swee is offering to buy over the shares of minorities and delist the company from the mainboard of SGX.

On hearing about the offer a couple of weeks ago, my initial reaction, as a shareholder, was that the offer was a little on the low side as the shares have a net asset value in the region of 35 cents.

However, on careful reconsideration, I am of the view that the offer is fair and reasonable. Here are some important factors to consider:

1.The 30 cents offer is at a premium of 20 per cent to the price of about 25 cents before the delisting and related offer of 30 cents was made. That is a fair premium considering Zagro has not traded at or around 30 cents for some time

2. Zagro shares have been illiquid for some time. It is hard to buy or sell the shares in any quantity. Shareholders will be better off switching to more liquid counters on the SGX

3. The regular dividend of 1 cent per share each year has been a main attraction of Zagro for shareholders. At 25 cents, the yield was an attractive 4 per cent. However, at 30 cents, the yield drops to 3.3 per cent. There are many other shares listed on the SGX that offer a higher yield. So shareholders can easily switch from Zagro to higher yielding stocks of better quality (an example would be Venture Corp which yields close to 6 per cent at $8.50 with its annual 50 cents dividend)

4. If the delisting proposal does not go through at the forthcoming EGM (date to be announced), the offer of 30 cents per share will be withdrawn. Thereafter, it is VERY likely that the shares will fall back to the 25 cents level. What then for shareholders?

5. On the other hand, if the delisting proposal goes through and the company is delisted, it will make no sense for shareholders to reject the 30 cents offer and stay on with the company. SGX rules will no longer apply and there will be much less protection for small shareholders, no corporate governance code to follow and no guarantee of being paid any dividend

6. Mr Poh does not appear desperate to take the company private. That means he is unlikely to increase the offer price above the 30 cents now on the table. He and related parties have been buying shares in the market of late, taking his direct and deemed interest above the original 67 per cent. If the delisting proposal fails with more than 10 per cent voting against it at the EGM, he is likely to let Zagro continue as a listed company.

The shares will go back to languish at 25 cents or thereabouts, probably.

So what is the best approach for small shareholders of Zagro? I think they could sell in the market now and lock in the 30 cents price. They will pay brokerage but, in return, they are insuring themselves against the delisting proposal not going through and the price dropping to 25 cents.

Alternatively, shareholders could wait for the formal offer and accept it and then wait for payment. All that will take up to three months! Rejecting the offer is not an option as it could incur a heavy opportunity cost, with the shares back at 25 cents

[opmi]

"Alternatively, shareholders could wait for the formal offer and accept it and then wait for payment. All that will take up to three months! Rejecting the offer is not an option as it could incur a heavy opportunity cost, with the shares back at 25 cents"

IMO, this is dumb thing to say.

- it implied a short term perspective anchored upon the Offer/Offer Price. It is like a boy saying to a girl : Accept my marriage proposal coz there is a risk of no one marrying you in the future.

- Alternatively, the Company can continue to manage the benefit for ALL shareholders even when the Offer fails.

FYI. I dont hold any Zagro shares.

[ksir]

Or else why we wonder his appearance in almost all sg listed corps' agms? I'm really interested to know his investment result rather than the add-more-noises arguments (esp in agms).

[pianist]

He couldn't get more of the shares cos is illiquid. I suggest he should not invest in penny shares and making noises in agm as usual. His post seems suggest he throwing the towel for penny counters.

[dahuai84]

I respect his opinions, but I disagree with him on many points. My views are highlighted in blue. 
 
========================================================================================

Article by Mr. Mano

Singapore-Exchange-listed Zagro Asia's major shareholder Poh Beng Swee  is offering to buy over the shares of minorities and delist the company from the mainboard of SGX.

On hearing about the offer a couple of weeks ago, my initial reaction, as a shareholder, was that the offer was a little on the low side as the shares have a net asset value in the region of 35 cents.

However, on careful reconsideration, I am of the view that the offer is fair and reasonable. Here are some important factors to consider:

1.The 30 cents offer  is at a premium of  20 per cent to the price of about 25 cents before the delisting and related offer of 30 cents was made. That is a fair premium considering Zagro has not traded at  or around 30 cents for some time

I do not know how long an investor's investment time horizon is becoming, seems to me it's getting way too short. Everyone wants to make a quick buck tomorrow, holding shares over the weekend is just too risky! Zagro was trading above $0.30 just slightly more than a year ago(around 10 Oct 14, refer to link below), not too long in my opinion. Last transacted price per share is $0.26 instead of $0.25 on 2 Nov 15, the premium of the exit offer is only 15.38%.

http://www.google.com/finance?chdnp=1&ch...uATzrYmoDg

2. Zagro shares have been illiquid for some time. It is hard to buy or sell the shares in any quantity. Shareholders will be better off switching to more liquid counters on the SGX

That's the beauty of companies like Zagro, they are hidden gems waiting to be noticed. If one cannot stand the illiquid properties of the company, one shouldn't be invested in Zagro in the first place. Being a shareholder of Zagro, means that he/she is an extremely patient individual because accumulating the shares is already testing one's patience to the limit.  

3. The regular dividend of 1 cent per share each year has been a main attraction of Zagro for shareholders. At 25 cents, the yield was an attractive 4 per cent. However, at 30 cents, the yield drops to 3.3 per cent. There are many other shares listed on the SGX that offer a higher yield. So shareholders can easily switch from Zagro to higher yielding stocks of better quality  (an example would be Venture Corp which yields close to 6 per cent at $8.50 with its annual 50 cents dividend)

One man's meat is another man's poison. Venture Corp is a higher yielding stock. Better quality? Maybe not. A quick look at Venture Corp FY14 results, Price to book(P/BV) is 1.254 and Earnings Per Share(EPS) is 50.9 cents, making dividend payout ratio to be 98.23%. Comparing to Zagro FY14 results, P/BV is only 0.875(using current trading price $0.30) and with a EPS of 2.79 cents making dividend payout ratio to be just 35.8%. If Zagro pays out 98.23% of its  FY14 earnings, Zagro shareholders will get a 9.13% dividend yield which is way higher than what Venture shareholders are receiving. 

4. If the delisting proposal does not go through at the forthcoming EGM (date to be announced), the offer of 30 cents per share will be withdrawn.  Thereafter, it is VERY  likely that the shares will fall back to the 25 cents level. What then for shareholders?

Ong Beng Seng tried to take over HPL last year. Look at HPL share price now, no drastic price fall. Shareholders should continue to hold on to a wonderful company and keep receiving dividends along the way.

5. On the other hand, if the delisting proposal goes through and the company is delisted, it will make no sense for shareholders to reject the 30 cents offer and stay on with the company. SGX rules will no longer apply and there will be much less protection for small shareholders, no corporate governance code to follow and no guarantee of being paid any dividend

I totally agree with Mr. Mano on this point. That is why all shareholders should attend the upcoming EGM and vote to keep the company listed.

6. Mr Poh does not appear desperate to take the company private. That means he is unlikely to increase the offer price above the 30 cents now on the table. He and related parties have been buying shares in the market of  late, taking his direct and deemed interest above the original 67 per cent. If the delisting proposal fails with more than 10 per cent voting against it at the EGM, he is likely to  let Zagro continue as a listed company. 

That will be great news! This is exactly what shareholders should hope for until they are presented with a better offer.

The shares will go back to languish at 25 cents or thereabouts, probably.

So what is the best approach for small shareholders of Zagro? I think they could sell in the market now and lock in the 30 cents price. They will pay brokerage but, in return, they are insuring themselves against the delisting proposal not going through and the price dropping to 25 cents.

Alternatively,  shareholders could wait for the formal offer and accept it and then wait for payment. All that will take up to three months! Rejecting the offer is not an option as it could incur a heavy opportunity cost, with the shares back at 25 cents

Benjamin Graham — 'In the short run, the market is a voting machine but in the long run, it is a weighing machine.'

[high powered]

I respect his opinions, but I disagree with him on many points. My views are highlighted in blue. 
 
========================================================================================

Article by Mr. Mano

Singapore-Exchange-listed Zagro Asia's major shareholder Poh Beng Swee  is offering to buy over the shares of minorities and delist the company from the mainboard of SGX.

On hearing about the offer a couple of weeks ago, my initial reaction, as a shareholder, was that the offer was a little on the low side as the shares have a net asset value in the region of 35 cents.

However, on careful reconsideration, I am of the view that the offer is fair and reasonable. Here are some important factors to consider:

1.The 30 cents offer  is at a premium of  20 per cent to the price of about 25 cents before the delisting and related offer of 30 cents was made. That is a fair premium considering Zagro has not traded at  or around 30 cents for some time

I do not know how long an investor's investment time horizon is becoming, seems to me it's getting way too short. Everyone wants to make a quick buck tomorrow, holding shares over the weekend is just too risky! Zagro was trading above $0.30 just slightly more than a year ago(around 10 Oct 14, refer to link below), not too long in my opinion. Last transacted price per share is $0.26 instead of $0.25 on 2 Nov 15, the premium of the exit offer is only 15.38%.

http://www.google.com/finance?chdnp=1&ch...uATzrYmoDg

2. Zagro shares have been illiquid for some time. It is hard to buy or sell the shares in any quantity. Shareholders will be better off switching to more liquid counters on the SGX

That's the beauty of companies like Zagro, they are hidden gems waiting to be noticed. If one cannot stand the illiquid properties of the company, one shouldn't be invested in Zagro in the first place. Being a shareholder of Zagro, means that he/she is an extremely patient individual because accumulating the shares is already testing one's patience to the limit.  

3. The regular dividend of 1 cent per share each year has been a main attraction of Zagro for shareholders. At 25 cents, the yield was an attractive 4 per cent. However, at 30 cents, the yield drops to 3.3 per cent. There are many other shares listed on the SGX that offer a higher yield. So shareholders can easily switch from Zagro to higher yielding stocks of better quality  (an example would be Venture Corp which yields close to 6 per cent at $8.50 with its annual 50 cents dividend)

One man's meat is another man's poison. Venture Corp is a higher yielding stock. Better quality? Maybe not. A quick look at Venture Corp FY14 results, Price to book(P/BV) is 1.254 and Earnings Per Share(EPS) is 50.9 cents, making dividend payout ratio to be 98.23%. Comparing to Zagro FY14 results, P/BV is only 0.875(using current trading price $0.30) and with a EPS of 2.79 cents making dividend payout ratio to be just 35.8%. If Zagro pays out 98.23% of its  FY14 earnings, Zagro shareholders will get a 9.13% dividend yield which is way higher than what Venture shareholders are receiving. 

4. If the delisting proposal does not go through at the forthcoming EGM (date to be announced), the offer of 30 cents per share will be withdrawn.  Thereafter, it is VERY  likely that the shares will fall back to the 25 cents level. What then for shareholders?

Ong Beng Seng tried to take over HPL last year. Look at HPL share price now, no drastic price fall. Shareholders should continue to hold on to a wonderful company and keep receiving dividends along the way.

5. On the other hand, if the delisting proposal goes through and the company is delisted, it will make no sense for shareholders to reject the 30 cents offer and stay on with the company. SGX rules will no longer apply and there will be much less protection for small shareholders, no corporate governance code to follow and no guarantee of being paid any dividend

I totally agree with Mr. Mano on this point. That is why all shareholders should attend the upcoming EGM and vote to keep the company listed.

6. Mr Poh does not appear desperate to take the company private. That means he is unlikely to increase the offer price above the 30 cents now on the table. He and related parties have been buying shares in the market of  late, taking his direct and deemed interest above the original 67 per cent. If the delisting proposal fails with more than 10 per cent voting against it at the EGM, he is likely to  let Zagro continue as a listed company. 

That will be great news! This is exactly what shareholders should hope for until they are presented with a better offer.

The shares will go back to languish at 25 cents or thereabouts, probably.

So what is the best approach for small shareholders of Zagro? I think they could sell in the market now and lock in the 30 cents price. They will pay brokerage but, in return, they are insuring themselves against the delisting proposal not going through and the price dropping to 25 cents.

Alternatively,  shareholders could wait for the formal offer and accept it and then wait for payment. All that will take up to three months! Rejecting the offer is not an option as it could incur a heavy opportunity cost, with the shares back at 25 cents

Benjamin Graham — 'In the short run, the market is a voting machine but in the long run, it is a weighing machine.'

[learner88]

From 25 Nov to 4 Dec, in the short span of 10 days, PBS has increased his holdings from 172,662,273 to 178,064,173 shares, i.e. from 66.72% to 68.81%. 

Since the offer, there has been an attempt by a shareholder to stop the delisting by writing an open letter and syndicating it to various websites. Curiously, a well respected minority shareholder activist made an attempt to justify the offer, seemingly in support of PBS in the press. 

PBS didn't get to be where he is by being naive, hopeful and passive. He knows when and how to put his money to work. I think that more or less determines the fate of Zagro. What happened to minority shareholders in k1 and Eastern should be regarded as RARE and exceptional. To put oneself against a better resourced and more experienced opponent, one can't play nice. The journey for Eastern shareholders was really ugly. Here for Zagro, the minorites have been too nice. Talk is free. 

Very quickly, some numbers to show how PBS has gained the upper hand. 

Let's do some math:

Condition 1
For PBS to push through all on his own (with every single minority voting against):
- the percentage of shares present and voting needs to be 66.72%/0.75 or 88.96%
- now that he has bought more shares, the level is now 91.75% 
Even without him buying any shares, I think it's a foregone conclusion that the first condition will be met by PBS' "brute force". 

Condition 2 - 10% against
This is where I think the minorities who have been talking loudly have fallen short. 
Again, it's a matter of how many minorities show up to vote against. 
IF PBS hasn't bought any more shares after the offer, what is the x% of shares that needs to be present and all to vote against?

x/ (x+0.6672) > 10%

x = 7.41% 

7.4% of all shares have to show up and ALL to vote against the delisting offer. Not quite possible. One has already voiced out his views in the press. 

Now that the PBS' stake has increased to 68.81%. 
Re-doing the same calculations, it's now 7.65%.

Looking at it from another angle, anything less than 7.65% + 68.81% ie 76.46% of shares showing up that day means PBS win. Even if you have the shares showing up, all the minority shareholders have to vote against PBS. Again, not quite possible. 

Assume then 20%(for) and 80%(against) by minorities. 
Minimum shares to be present= 68.81% + 9.83% = 78.6% 

At 30/70, you need 68.81% + 11.47% = 80.28% 
At 40/60, you need 68.81% + 13.77% = 82.58%
At 50/50, you need 68.81% + 17.21% = 86.02%
At 60/40, you need 68.81% + 22.96% = 91.77%

Really, if the minorities can't even agree amongst themselves to not accept the offer, then there is no point in the minority minorities trying to fight. Give it up and live another day. 

Just to be clear. I do not like this offer. But to prevent the delisting, you need quantity (of shares to be present) and quality (all or as many minorities to vote against the delisting offer). It's tough to organise this. I know realistically what are my chances. 

But the most "evil/scheming" thing a minority shareholder could do? 
- Buy up all and any shares at or below 30c. The most you can lose is the commission ASSUMING the delisting offer passes through.
- BUY AND BUY AND BUY
- This is to stop PBS or to play a game with him to have him RAISE THE PRICE
- Then 2 days before the meeting assuming no revision in price, SELL all your shares
- At the meeting, vote AGAINST the delisting offer
- You took a free option for a revised price
- None came
- You pay up just like you would pay up when you buy Toto
- But at least you put up a real fight
- But alas, who is willing to do this? 





How do I add a signature? 
i just realised this: hilang is not 害人 hilang means disappear http://www.kamus.net/indonesia/hilang


Answer to self: Cyclone says: In order to be able to edit signature, you need at least 51 posts count.