Keppel Limited

[GFG]

My english no good, but entitled and bound to means they are entitled and they compulsary have to acquire right ?

So which part of The companies act section 215(1) to (3) state that there is a case which the minority will be stuck in a delisted PRIVATE COMPANY ?

Hi Layman,
If delisting now because >90%, then yes, they have to compulsorily acquire minorities.

Like I mentioned many many times in earlier posts, if they fail to get 90%, and over the coming months increase stake and free float drops <10%, kep land gets suspended. After suspension period, will be forced to delist.
In this scenario, minorities will be stuck in a delisted private company isn't it?
(They are not obliged to acquire minorities if delisting is due to free float <10%.) Again, just want to emphasizing this scenario is AFTER THIS OFFER EXPIRES.

[GFG]

Weather forecast did not say the haze will hit Singapore today , but how come there is so much smoke in the air ?
Cough , Cough , Cough ( almost choke to death )

Back to Kepland :
I dig out the recent case of Capitaland cash offer for Capmall Asia for comparison, and found some links :
http://infopub.sgx.com/FileOpen/CMA%20Of...eID=301540
http://media.corporate-ir.net/media_file...140414.pdf

Capitaland first offer is $2.22 , which is 20.7% premium to Net Asset Value .
Capataland then further sweeten the deal to $2.35, which is 27.7% premium to the NAV .

If we were to applied the same premium to Kepland NAV of $4.95,
that would work out to be $5.97 ( 20.7% premium )
and $6.32 ( 27.7% premium )

Too bad, if and only if Keppel Corp are Gentleman like Capitaland.
CEO of Capitaland, Mr Lim Ming Yan, deserved my respect ! Salute !

I don't think Mr Lim Ming Yan was trying to be a gentleman... they are in this for profits profits profits. If the market would accept an offer of $0.01 he'd do the deal in a heartbeat.

I also agree with you that the $4.60 offer is too low. Obviously they are capitalising on the fact that the market conditions for such property counters is dim now.

Unfortunately, the stark reality is that if you're a minority SH, the odds are really against you. Its quite hard to force a higher offer. They MAY eventually give a higher price to get 100% control, but honestly, if they want, they can simply delist the company (again via the way I mentioned earlier), and they'd then have a 90+% stake in a private company.
That basically gives them statutory control, and the <10% stake held by minority is nothing more than an irritance. They sure as hell wouldn't need this minority shareholder to approve any decisions they make. As a private company, minority wouldn't even be protected by listing rules either.

Unless there is a substantial SH with deep pockets who would enter the fray and create problems (Blackrock?), the possible scenarios for minority SH after the offer expires are, I am afraid, not good.
Unfortunately, I don't think Blackrock will be trying to force a higher offer price because:
1) They are substantial SH of Kepcorp too. Management prob contacted Blackrock prior to the offer to the public.
2) Usually if a "white knight" has intention to force a higher price, they'd be more vocal, and indicate their intentions to the media. Blackrock has been totally silent thus far.

[grubb]

Actually I am not interested to read their offer documents, these are well formatted SOP document out to confuse the general public .

As I have have mentioned above, Keppel has hastily work out a counter-productive offer that shoot in their own feet.
The outcome of the % acceptance could well be humiliating.

I have stated that my reasonable price to acceptable the offer is S$5.48 .

Whether Keppel Corp want to revise ( and how they do it ) I am not so concerned.

$4.60 to buy out Kepland is simply too low !

Hi Layman A,

I think under the Takeover Code, once the company makes a "No increase statement", it cannot revise the offer anymore. Of course there are always exceptions and I don't know the code enough to point them all out. Anyway, extracted from the code:

When revision is not permissible
An offeror must not place itself in a position where it would be required to revise its offer if:-
(a) it has made a no increase statement; or

http://www.mas.gov.sg/sic
http://www.mas.gov.sg/~/media/resource/s...r_2012.pdf

[specuvestor]

Actually I am not interested to read their offer documents, these are well formatted SOP document out to confuse the general public .

As I have have mentioned above, Keppel has hastily work out a counter-productive offer that shoot in their own feet.
The outcome of the % acceptance could well be humiliating.

I have stated that my reasonable price to acceptable the offer is S$5.48 .

Whether Keppel Corp want to revise ( and how they do it ) I am not so concerned.

$4.60 to buy out Kepland is simply too low !

Weather forecast did not say the haze will hit Singapore today , but how come there is so much smoke in the air ?
Cough , Cough , Cough ( almost choke to death )

Back to Kepland :
I dig out the recent case of Capitaland cash offer for Capmall Asia for comparison, and found some links :
http://infopub.sgx.com/FileOpen/CMA%20Of...eID=301540
http://media.corporate-ir.net/media_file...140414.pdf

Capitaland first offer is $2.22 , which is 20.7% premium to Net Asset Value .
Capataland then further sweeten the deal to $2.35, which is 27.7% premium to the NAV .

If we were to applied the same premium to Kepland NAV of $4.95,
that would work out to be $5.97 ( 20.7% premium )
and $6.32 ( 27.7% premium )

Too bad, if and only if Keppel Corp are Gentleman like Capitaland.
CEO of Capitaland, Mr Lim Ming Yan, deserved my respect ! Salute !

It is obvious to me the smoke comes from your own exhaust when you are not even keen to find out detail on the offer documents. CMA and KPLD are not even comparables.

It also occurs to me that you have not observed many M&A before.

As Grubb highlighted, "No increase statement" is a legal statement under the takeover code.

In addition to what Boon wrote before, there is also such thing as a delisting offer with 75% threshold which is under SGX code.

Confusion usually stems from SGX rules which governs listing, and companies act which governs Singapore companies (not bermudan companies for eg) You probably need to spend more time reading the well intended replies from VBs than the offer document.

Now, if I am not wrong, it seems that there could be 4 possible scenarios instead of 3, at close of the offer:

If T = total number of shares issued

1) If KepCorp crosses the compulsory acquisition threshold (>95.5% of T, or adjusted equivalent threshold ) => compulsory acquisition of shares by Offeror AND subsequent delisting of KepLand.
2) If KepCorp crosses 90% but less than 95.5 of T, => No compulsory acquisition of shares but KepLand would be delisted on the basis of “non-free-float-compliance” and become a private company. Dissenting shareholders are entitled to demand that their shares be bought out by the offeror at the same “takeover” offer price. Otherwise, remain as minority shareholders of a private company.
3) If KepCorp fails to cross 90% of T, 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.
4) If KepCorp fails to cross 90% of T, AND KepLand does not meet the “free float” requirement of the Listing Manual => KepLand would be suspended initially by SGX, and subsequently delisted if the "free-float" condition could not be restored after the grace period.

[grubb]

Now, if I am not wrong, it seems that there could be 4 possible scenarios instead of 3, at close of the offer:

If T = total number of shares issued

1) If KepCorp crosses the compulsory acquisition threshold (>95.5% of T, or adjusted equivalent threshold ) => compulsory acquisition of shares by Offeror AND subsequent delisting of KepLand.
2) If KepCorp crosses 90% but less than 95.5 of T, => No compulsory acquisition of shares but KepLand would be delisted on the basis of “non-free-float-compliance” and become a private company. Dissenting shareholders are entitled to demand that their shares be bought out by the offeror at the same “takeover” offer price. Otherwise, remain as minority shareholders of a private company.
3) If KepCorp fails to cross 90% of T, 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.
4) If KepCorp fails to cross 90% of T, AND KepLand does not meet the “free float” requirement of the Listing Manual => KepLand would be suspended initially by SGX, and subsequently delisted if the "free-float" condition could not be restored after the grace period.

Hi Boon,

After reading your scenario (2), I realised that stupid me did not read the statement in the circular correctly. So although the compulsory acquisition is reached at 95%, it is still game over at 90%. At least that resolves my confusion for companies act 215. Thanks for pointing it out.

[GFG]

Now, if I am not wrong, it seems that there could be 4 possible scenarios instead of 3, at close of the offer:

If T = total number of shares issued

1) If KepCorp crosses the compulsory acquisition threshold (>95.5% of T, or adjusted equivalent threshold ) => compulsory acquisition of shares by Offeror AND subsequent delisting of KepLand.
2) If KepCorp crosses 90% but less than 95.5 of T, => No compulsory acquisition of shares but KepLand would be delisted on the basis of “non-free-float-compliance” and become a private company. Dissenting shareholders are entitled to demand that their shares be bought out by the offeror at the same “takeover” offer price. Otherwise, remain as minority shareholders of a private company.
3) If KepCorp fails to cross 90% of T, 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.
4) If KepCorp fails to cross 90% of T, AND KepLand does not meet the “free float” requirement of the Listing Manual => KepLand would be suspended initially by SGX, and subsequently delisted if the "free-float" condition could not be restored after the grace period.

Hi Boon,

After reading your scenario (2), I realised that stupid me did not read the statement in the circular correctly. So although the compulsory acquisition is reached at 95%, it is still game over at 90%. At least that resolves my confusion for companies act 215. Thanks for pointing it out.

Yup. So considering a minority SH who does NOT want to accept the offer currently, here's what would happen for the above 4 scenarios:

1) No choice. Will sell eventually at $4.6
2) Can decide NOT to sell, but realistically, will sell at $4.6. Or risk being a minority in a private company with no way to exit anything soon. No way to influence the company either (too small a stake).
3) KepLand remains listed. This is the scenario I mentioned. They can gradually increase stake, and scenario 3 becomes scenario 4. In the meantime, low liquidity, earlier SH who accepted gets only $4.38, KepCorp buys more at a substantially lower price (likely below $4.38), and eventually reaches scenario 4
4) Suspended and eventually delisted. Minority SH gets stuck in a private company much like scenario 2.
But in most cases, the controlling SH will still make another offer to buy out after delisting although this is not mandatory.
At this stage, its anybody's guess what the offer could be.
On a separate note, yes, I think kepcorp cannot make another offer within 1 year of this current offer.

Like I said, all the above 4 scenarios doesn't look good. Only chance for a minority who insists on a higher offer, is to have a white knight with deep pockets to stand up to Keppel corp. Even Blackrock with only a 3.2% stake can hardly play that role.
Please feel free to correct me if my analysis of the above scenarios are inaccurate.

[GFG]

Every time a new offer comes out I learn something new about the Companies Act. It turns out that in this case, the minimum threshold for Keppel Corp before they can exercise compulsory acquisition is >95%. See below for the extract from page 12 of the offer letter:

========================
For the avoidance of doubt, the Offeror will extend the Higher Offer Price to all Shareholders, including those Shareholders who, at the date on which the Compulsory Acquisition Threshold is reached, have already accepted the Offer. For purely illustrative purposes only, based on a total number of:

(i) 1,545,288,730 issued Shares (excluding treasury shares) as at the Latest Practicable Date, in order for the Compulsory Acquisition Threshold to be reached, the Offeror must acquire or agree to acquire (whether pursuant to valid acceptances of the Offer or otherwise) an additional 40.9 per cent. of the total number of issued Shares, which when aggregated with the number of Shares owned, controlled or agreed to be acquired by the Offeror as at the date of the Offer, represents 95.5 per cent. of the total number of issued Shares; and

(ii) 1,625,703,507 issued Shares (excluding treasury shares), being the maximum potential issued share capital of the Company , in order for the Compulsory Acquisition Threshold to be reached, the Offeror must acquire or agree to acquire (whether pursuant to valid acceptances of the Offer or otherwise) an additional 43.3 per cent. of the maximum potential issued share capital of the Company, which when aggregated with the number of Shares owned, controlled or agreed to be acquired by the Offeror as at the date of the Offer, represents 95.2 per cent. of the maximum potential issued share capital of the Company.

=====================================
And the reason is because of a difference in company act 215(1) and 215(3). I went to read the company act but I still dont understand the difference. From page 21 of the offer letter:

====================================
Dissenting Shareholders have the right under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer, such number of Shares which, together with the Shares held by the Offeror, its related
corporations or their respective nominees, comprise 90 per cent. or more of the total number of issued Shares as at the final Closing Date of the Offer. Dissenting Shareholders who wish to exercise such right are advised to seek their own independent legal advice. [u]Unlike Section 215(1) of the Companies Act, the 90 per cent. threshold under Section 215(3) of the Companies Act does not exclude Shares held by the Offeror, its related corporations or their respective nominees.[/u]
=====================================

However, if the freefloat drops below 10%, the company will be suspended. I think Boon meant suspended not delisted right?

Also Zaobao yesterday mentioned that the level of acceptances will only be announced daily after it has crossed 72%.

Taking all the information into account, I believe that delisting is likely to fail.

(1) The minimum threshold is higher than the 90% that I thought.
(2) Because Kepcorp has stated that it will not revise the offer, and because the offer is structured in such a funny way, I believe rational shareholders will rather sell on the market than tender their shares. New shareholders who bought on the market will not be so silly to tender $4.38 and lose money. They will rather wait for other people to tender to be sure they can get $4.60.
(3) The despatch date was 12 Feb. It is already halfway through the tender period but 72% is still not crossed yet. The closing date is on 12 March 2015. I believe that an extension will be likely.

If the price drops upon failure, it may be a good chance to acquire Keppel Land shares and wait for the next offer 1 year later. I believe there is a 12 month moratorium on a new offer if the current offer fails, just like Pertama.

Did I get anything wrong? What does everyone think?

"Also Zaobao yesterday mentioned that the level of acceptances will only be announced daily after it has crossed 72%. "

Is this true?
Can any VB here verify this?
I thought they wont announce the level of acceptances until after the closing date (12th march)

[Layman A]

After munching thru the scenerios and input given by the helpful brothers several times….
( Damn, it really give me migraine )

Regarding the 4 scenerios throw out by Boon,
Ok, to make things simple let's summarize it :

What happened to those minorities who do not accept the offer ?

scenario 1 or 2
Keppel get to call for a suspension once it hit 90%, be it scenario 1 or 2 .
However, the minorities still get a chance to exit , if they accept the offer price $4.60

Scenerio 3
Keppel fail to collect 90% and free float stay above 10%, take over fail, case closed. Minorities get to keep their shares.

Scenerio 4 will not happen, because there are no other substantial shareholder besides Keppel (Offeror).
Blackrock is NOT a substantial shareholder because their shareholding is only 3.2% .
( Blackrock need to hold 5% of Keppel Land to be classified as SSH )

Simple math :

Keppel + SSH + Minority = 100%

If Keppel is less than 90% , SSH = 0 , how can the Minority become less than 10% ?

Now, if I am not wrong, it seems that there could be 4 possible scenarios instead of 3, at close of the offer:

If T = total number of shares issued

1) If KepCorp crosses the compulsory acquisition threshold (>95.5% of T, or adjusted equivalent threshold ) => compulsory acquisition of shares by Offeror AND subsequent delisting of KepLand.
2) If KepCorp crosses 90% but less than 95.5 of T, => No compulsory acquisition of shares but KepLand would be delisted on the basis of “non-free-float-compliance” and become a private company. Dissenting shareholders are entitled to demand that their shares be bought out by the offeror at the same “takeover” offer price. Otherwise, remain as minority shareholders of a private company.
3) If KepCorp fails to cross 90% of T, 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.
4) If KepCorp fails to cross 90% of T, AND KepLand does not meet the “free float” requirement of the Listing Manual => KepLand would be suspended initially by SGX, and subsequently delisted if the "free-float" condition could not be restored after the grace period.

[Layman A]

The biggest loser will be the Minority who accepted the offer of $4.38
and the outcome falls under scenerio 3 :

Keppel fail to collect 90% and free float stay above 10%, take over failed, case closed.

[grubb]

Every time a new offer comes out I learn something new about the Companies Act. It turns out that in this case, the minimum threshold for Keppel Corp before they can exercise compulsory acquisition is >95%. See below for the extract from page 12 of the offer letter:

========================
For the avoidance of doubt, the Offeror will extend the Higher Offer Price to all Shareholders, including those Shareholders who, at the date on which the Compulsory Acquisition Threshold is reached, have already accepted the Offer. For purely illustrative purposes only, based on a total number of:

(i) 1,545,288,730 issued Shares (excluding treasury shares) as at the Latest Practicable Date, in order for the Compulsory Acquisition Threshold to be reached, the Offeror must acquire or agree to acquire (whether pursuant to valid acceptances of the Offer or otherwise) an additional 40.9 per cent. of the total number of issued Shares, which when aggregated with the number of Shares owned, controlled or agreed to be acquired by the Offeror as at the date of the Offer, represents 95.5 per cent. of the total number of issued Shares; and

(ii) 1,625,703,507 issued Shares (excluding treasury shares), being the maximum potential issued share capital of the Company , in order for the Compulsory Acquisition Threshold to be reached, the Offeror must acquire or agree to acquire (whether pursuant to valid acceptances of the Offer or otherwise) an additional 43.3 per cent. of the maximum potential issued share capital of the Company, which when aggregated with the number of Shares owned, controlled or agreed to be acquired by the Offeror as at the date of the Offer, represents 95.2 per cent. of the maximum potential issued share capital of the Company.

=====================================
And the reason is because of a difference in company act 215(1) and 215(3). I went to read the company act but I still dont understand the difference. From page 21 of the offer letter:

====================================
Dissenting Shareholders have the right under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer, such number of Shares which, together with the Shares held by the Offeror, its related
corporations or their respective nominees, comprise 90 per cent. or more of the total number of issued Shares as at the final Closing Date of the Offer. Dissenting Shareholders who wish to exercise such right are advised to seek their own independent legal advice. [u]Unlike Section 215(1) of the Companies Act, the 90 per cent. threshold under Section 215(3) of the Companies Act does not exclude Shares held by the Offeror, its related corporations or their respective nominees.[/u]
=====================================

However, if the freefloat drops below 10%, the company will be suspended. I think Boon meant suspended not delisted right?

Also Zaobao yesterday mentioned that the level of acceptances will only be announced daily after it has crossed 72%.

Taking all the information into account, I believe that delisting is likely to fail.

(1) The minimum threshold is higher than the 90% that I thought.
(2) Because Kepcorp has stated that it will not revise the offer, and because the offer is structured in such a funny way, I believe rational shareholders will rather sell on the market than tender their shares. New shareholders who bought on the market will not be so silly to tender $4.38 and lose money. They will rather wait for other people to tender to be sure they can get $4.60.
(3) The despatch date was 12 Feb. It is already halfway through the tender period but 72% is still not crossed yet. The closing date is on 12 March 2015. I believe that an extension will be likely.

If the price drops upon failure, it may be a good chance to acquire Keppel Land shares and wait for the next offer 1 year later. I believe there is a 12 month moratorium on a new offer if the current offer fails, just like Pertama.

Did I get anything wrong? What does everyone think?

"Also Zaobao yesterday mentioned that the level of acceptances will only be announced daily after it has crossed 72%. "

Is this true?
Can any VB here verify this?
I thought they wont announce the level of acceptances until after the closing date (12th march)

Here you go. I took a picture of the relevant article. I think I'll go read the companies act and takeover code properly this week