Keppel Limited

[Layman A]

Let me ask you one question.

If you are the shareholder of Keppel Land and you have the chance and convenience to sell your Keppel Land shares in the open market every single day, for $4.53 to $4.54 per share, Would you be silly enough to tender your share at $4.38 ?

The purpose of the Blackrock effort in maintaining the share price at $4.53 is to make the Keppel Corp offer look "Stupid".
And I can see that they are quite determine in doing so.

Lastly, I think the reason that Keppel Corp did not review the percentage of acceptance is that it is too embarrassing to admit that none ( or negligible ) of the minority has sign up thus far !

[GFG]

Let me ask you one question.

If you are the shareholder of Keppel Land and you have the chance and convenience to sell your Keppel Land shares in the open market every single day, for $4.53 to $4.54 per share, Would you be silly enough to tender your share at $4.38 ?

The purpose of the Blackrock effort in maintaining the share price at $4.53 is to make the Keppel Corp offer look "Stupid".
And I can see that they are quite determine in doing so.

Lastly, I think the reason that Keppel Corp did not review the percentage of acceptance is that it is too embarrassing to admit that none ( or negligible ) of the minority has sign up thus far !

Its hard to second guess, but how'd you know that Backrock doesn't support the privatization? They own more than 5% of Keppel corp itself.
They could be buying up, and then eventually accepting the offer.
In any case, I also noted they have been buying AND selling recently, so some of these trades may be done on behalf of their clients. So it may not necessarily indicate what they plan to do.

On the other hand, I actually think this current share price helps Keppel. If you are a shareholder, yes, it doesn't make sense to accept at a lower price, so either you'd have to sell on the open market, or accept and hope it goes past the 90% mark.
If you sell on the open market, the new owner of the shares will have the same decision to make, but having bought at around $4.54 or so, their only realistic option is to accept and bet that it will cross the 90% mark.
So any share transaction at this stage ($4.54) means the offer will be accepted. Otherwise why buy?

Keppel corp has already indicated that in the event a free float is too low after this exercise, they don't intend to maintain free float to keep it listed.
So existing shareholders could be stuck with a delisted Keppel land with no way to exit anytime soon.
I don't think existing minorities would want to risk that

[Layman A]

Thanks for sharing your view on this , but the scenarios that you highlighted will not exist. There is only two outcome :

1. Keppel Corp are not able to hit 90% mark and they have to keep Kepland floated, even if they have acquire 89% holding.

2. They manage to hit 90% compulsary acquisition mark, and they have the right to "force buy" the remaining 10% share at their offer price even if the minority do not agreed to sell.

You can check the SGX listing rules and regulations to verify this.

Let me ask you one question.

If you are the shareholder of Keppel Land and you have the chance and convenience to sell your Keppel Land shares in the open market every single day, for $4.53 to $4.54 per share, Would you be silly enough to tender your share at $4.38 ?

The purpose of the Blackrock effort in maintaining the share price at $4.53 is to make the Keppel Corp offer look "Stupid".
And I can see that they are quite determine in doing so.

Lastly, I think the reason that Keppel Corp did not review the percentage of acceptance is that it is too embarrassing to admit that none ( or negligible ) of the minority has sign up thus far !

Its hard to second guess, but how'd you know that Backrock doesn't support the privatization? They own more than 5% of Keppel corp itself.
They could be buying up, and then eventually accepting the offer.
In any case, I also noted they have been buying AND selling recently, so some of these trades may be done on behalf of their clients. So it may not necessarily indicate what they plan to do.

On the other hand, I actually think this current share price helps Keppel. If you are a shareholder, yes, it doesn't make sense to accept at a lower price, so either you'd have to sell on the open market, or accept and hope it goes past the 90% mark.
If you sell on the open market, the new owner of the shares will have the same decision to make, but having bought at around $4.54 or so, their only realistic option is to accept and bet that it will cross the 90% mark.
So any share transaction at this stage ($4.54) means the offer will be accepted. Otherwise why buy?

Keppel corp has already indicated that in the event a free float is too low after this exercise, they don't intend to maintain free float to keep it listed.
So existing shareholders could be stuck with a delisted Keppel land with no way to exit anytime soon.
I don't think existing minorities would want to risk that

[GFG]

Thanks for sharing your view on this , but the scenarios that you highlighted will not exist. There is only two outcome :

1. Keppel Corp are not able to hit 90% mark and they have to keep Kepland floated, even if they have acquire 89% holding.

2. They manage to hit 90% compulsary acquisition mark, and they have the right to "force buy" the remaining 10% share at their offer price even if the minority do not agreed to sell.

You can check the SGX listing rules and regulations to verify this.

Hi, thanks for the clarification.
Yes, these are the 2 scenarios you have highlighted.
I was trying to say that in the event that Keppel corp gets an 89% stake, yes, Keppel land stays listed, but the share price will likely drop substantially upon the expiry of the offer. (It was below $4 before this offer). Keppel corp can then gradually buy more shares on the open market over time. (at a lower price too)
Once it hits 90%, free float <10%, it can then force a delisting by not trying to increase its free float. In fact, they did mention this is their intention in the offer document:

To the best of the Offeror’s knowledge and based on information available to the
Offeror as at the date of this Announcement, the free float of the Company is
approximately 45 per cent.
In the event the Company does not meet the free float requirements of the Listing
Manual, the Offeror does not intend to maintain the present listing status of the
Company and accordingly, does not intend to place out any Shares held by the
Offeror to members of the public to meet the Shareholding Requirement.

Even before they hit a 90% stake, after this offer exercise, they will own a very substantial portion of the company.
Liquidity will then likely be very thin and existing minorities may find it hard to sell (on top of the lower share price)
It happened with another company just a few years back, Pertama Holdings.

So basically if you are a minority, and you decide not to sell, your only other hope is that 1) they increase their offer (they have already said the offer is final)
OR
2) Someone else comes in to offer a higher price, or pressure them to increase their offer (highly unlikely)

Otherwise after the offer exercise, you'd be stuck with a illiquid stock with a much lower share price. After a period of buying back, Keppel corp can still force a delisting at a later stage anyway

Let me ask you one question.

If you are the shareholder of Keppel Land and you have the chance and convenience to sell your Keppel Land shares in the open market every single day, for $4.53 to $4.54 per share, Would you be silly enough to tender your share at $4.38 ?

The purpose of the Blackrock effort in maintaining the share price at $4.53 is to make the Keppel Corp offer look "Stupid".
And I can see that they are quite determine in doing so.

Lastly, I think the reason that Keppel Corp did not review the percentage of acceptance is that it is too embarrassing to admit that none ( or negligible ) of the minority has sign up thus far !

Its hard to second guess, but how'd you know that Backrock doesn't support the privatization? They own more than 5% of Keppel corp itself.
They could be buying up, and then eventually accepting the offer.
In any case, I also noted they have been buying AND selling recently, so some of these trades may be done on behalf of their clients. So it may not necessarily indicate what they plan to do.

On the other hand, I actually think this current share price helps Keppel. If you are a shareholder, yes, it doesn't make sense to accept at a lower price, so either you'd have to sell on the open market, or accept and hope it goes past the 90% mark.
If you sell on the open market, the new owner of the shares will have the same decision to make, but having bought at around $4.54 or so, their only realistic option is to accept and bet that it will cross the 90% mark.
So any share transaction at this stage ($4.54) means the offer will be accepted. Otherwise why buy?

Keppel corp has already indicated that in the event a free float is too low after this exercise, they don't intend to maintain free float to keep it listed.
So existing shareholders could be stuck with a delisted Keppel land with no way to exit anytime soon.
I don't think existing minorities would want to risk that

[Boon]

I think 3 scenarios could happen at the close of the offer:

1) If KepCorp crosses the compulsory acquisition threshold (>90%) => compulsory acquisition and delisting of KepLand
2) If KepCorp fails to cross the compulsory acquisition threshold ( < 90% ) BUT KEPland still meets the “free float” requirement of the Listing Manual (i.e. at least 10 per cent of the total number of issued Shares are held by at least 500 Shareholders who are members of the public) => KepLand would remain listed.
3) If KepCorp fails to cross the compulsory acquisition threshold ( < 90% ) AND KepLand does not meet the “free float” requirement of the Listing Manual => KepLand would be delisted until the "free-float" condition is restored.
" In the event the Company does not meet the free float requirements of the Listing Manual, the Offeror does not intend to maintain the present listing status of the Company and accordingly, does not intend to place out any Shares held by the Offeror to members of the public to meet the Shareholding Requirement. "

[Layman A]

Hi GFG,

You have mixed up the formatting above and make it very difficult to read.
Or are you trying to confuse me ?

Ok, I cut and paste what you wrote above :

GFG wrote :
" Hi, thanks for the clarification.
Yes, these are the 2 scenarios you have highlighted.
I was trying to say that in the event that Keppel corp gets an 89% stake, yes, Keppel land stays listed, but the share price will likely drop substantially upon the expiry of the offer. (It was below $4 before this offer). Keppel corp can then gradually buy more shares on the open market over time. (at a lower price too)
Once it hits 90%, free float <10%, it can then force a delisting by not trying to increase its free float. "

[Layman A]

Hi Boon,

Can you explain to me how a scenario 3 could happen.

I think 3 scenarios could happen at the close of the offer:

1) If KepCorp crosses the compulsory acquisition threshold (>90%) => compulsory acquisition and delisting of KepLand
2) If KepCorp fails to cross the compulsory acquisition threshold ( < 90% ) BUT KEPland still meets the “free float” requirement of the Listing Manual (i.e. at least 10 per cent of the total number of issued Shares are held by at least 500 Shareholders who are members of the public) => KepLand would remain listed.
3) If KepCorp fails to cross the compulsory acquisition threshold ( < 90% ) AND KepLand does not meet the “free float” requirement of the Listing Manual => KepLand would be delisted until the "free-float" condition is restored.
" In the event the Company does not meet the free float requirements of the Listing Manual, the Offeror does not intend to maintain the present listing status of the Company and accordingly, does not intend to place out any Shares held by the Offeror to members of the public to meet the Shareholding Requirement. "

[Boon]

Hi Boon,

Can you explain to me how a scenario 3 could happen.

I think 3 scenarios could happen at the close of the offer:

1) If KepCorp crosses the compulsory acquisition threshold (>90%) => compulsory acquisition and delisting of KepLand
2) If KepCorp fails to cross the compulsory acquisition threshold ( < 90% ) BUT KEPland still meets the “free float” requirement of the Listing Manual (i.e. at least 10 per cent of the total number of issued Shares are held by at least 500 Shareholders who are members of the public) => KepLand would remain listed.
3) If KepCorp fails to cross the compulsory acquisition threshold ( < 90% ) AND KepLand does not meet the “free float” requirement of the Listing Manual => KepLand would be delisted until the "free-float" condition is restored.
" In the event the Company does not meet the free float requirements of the Listing Manual, the Offeror does not intend to maintain the present listing status of the Company and accordingly, does not intend to place out any Shares held by the Offeror to members of the public to meet the Shareholding Requirement. "

KepCorp holds 89%, less than 500 other shareholders who are members of the public hold the other 11%.

[Layman A]

Hi Boon,

Thanks for the info.

Hi Boon,

Can you explain to me how a scenario 3 could happen.

I think 3 scenarios could happen at the close of the offer:

1) If KepCorp crosses the compulsory acquisition threshold (>90%) => compulsory acquisition and delisting of KepLand
2) If KepCorp fails to cross the compulsory acquisition threshold ( < 90% ) BUT KEPland still meets the “free float” requirement of the Listing Manual (i.e. at least 10 per cent of the total number of issued Shares are held by at least 500 Shareholders who are members of the public) => KepLand would remain listed.
3) If KepCorp fails to cross the compulsory acquisition threshold ( < 90% ) AND KepLand does not meet the “free float” requirement of the Listing Manual => KepLand would be delisted until the "free-float" condition is restored.
" In the event the Company does not meet the free float requirements of the Listing Manual, the Offeror does not intend to maintain the present listing status of the Company and accordingly, does not intend to place out any Shares held by the Offeror to members of the public to meet the Shareholding Requirement. "

KepCorp holds 89%, less than 500 other shareholders who are members of the public hold the other 11%.

[grubb]

Hi Boon,

Can you explain to me how a scenario 3 could happen.

I think 3 scenarios could happen at the close of the offer:

1) If KepCorp crosses the compulsory acquisition threshold (>90%) => compulsory acquisition and delisting of KepLand
2) If KepCorp fails to cross the compulsory acquisition threshold ( < 90% ) BUT KEPland still meets the “free float” requirement of the Listing Manual (i.e. at least 10 per cent of the total number of issued Shares are held by at least 500 Shareholders who are members of the public) => KepLand would remain listed.
3) If KepCorp fails to cross the compulsory acquisition threshold ( < 90% ) AND KepLand does not meet the “free float” requirement of the Listing Manual => KepLand would be delisted until the "free-float" condition is restored.
" In the event the Company does not meet the free float requirements of the Listing Manual, the Offeror does not intend to maintain the present listing status of the Company and accordingly, does not intend to place out any Shares held by the Offeror to members of the public to meet the Shareholding Requirement. "

KepCorp holds 89%, less than 500 other shareholders who are members of the public hold the other 11%.

Doing this exercise out of curiosity.

Kepland has 1,545,288,730 shares outstanding at the moment. Let's assume Kepcorp holds 89.9% and there are 499 other shareholders holding the 10.1%. And let's assume Blackrock is one of those who do not tender. Blackrock holds 3.245% by themselves, so the remaining 498 shareholders holds 6.855%.

This means at current price of $4.54, 498 shareholders will on average each own $965,703 worth of Kepland shares. Obviously, their portfolio is not entirely made up of Kepland. So lets assume each of the 498 shareholders have 10% of their portfolio in Kepland, which make all of them worth ~10mil.

I know Singapore is a rich man place, but I don't think there's 498 10millionaires sitting around with Kepland shares (although you never know).

Its very much more likely that these shareholders will have sold their shares on the market now at 4.54, so if the freefloat is >10%, the number of shareholders will be vastly more than 500.

Alternatively, if the freefloat is >10% and number of shareholders is <500, Kepland will put up a notice to warn of trading suspension. Being a GLC, I doubt Kepland will be delisted while there are still minorities holding on. Minorities will know the game is up and they will quickly tender to get their $4.60.

So right now the problem is as Layman A pointed out. You wait for me, I wait for you. In the end nobody tender and the delisting fails.

Thats just my guess. Did this make sense?