Keppel Limited

[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:

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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.

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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:

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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]
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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

Thanks!
This is useful. From what the article says, Keppelcorp needs 90% OF THE MINORITIY SHs to accept (not the total issued shares)
That adds up to 95.5% of the total issued shares
That's different from what i understood

@Layman: scenario 4 happens when Kep corp has <90%, minority >10%, BUT there are <500 shareholders.
Albeit an unlikely scenario, but still possible

[Layman A]

I have check it out and very sure that

The 500 minority do not come into the picture.

Logically, when an offeror tries to take over the company , there should be only 1 indicator to meet ( ie 90% shareholding ) , otherwise there will be ambiguity and become a loophole for the offeror to trap the minorites.

The 500 shareholders requirement only come into picture when a private company wanted to go listing and become listed company.

The 500 minorities scenerios was brought to the Pertama delisting offer to confuse and scare the minorites into giving up their shares.

Hi GFG
If you are not convinced, you may check with the SGX.

[grubb]

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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]
=====================================

Thanks!
This is useful. From what the article says, Keppelcorp needs 90% OF THE MINORITIY SHs to accept (not the total issued shares)
That adds up to 95.5% of the total issued shares
That's different from what i understood

@Layman: scenario 4 happens when Kep corp has <90%, minority >10%, BUT there are <500 shareholders.
Albeit an unlikely scenario, but still possible

Hi GFG,

I was confused by the article as well. The compulsory acquisition threshold is met at 95.5% but at 90% shareholders are entitled to ask the offeror to acquire their shares. So in the end 90% is still the figure we should be looking for. See above for the explanation from their circular.

[specuvestor]

I think the technicality is that at 95.5% the offeror has right to acquire ie call option

At 90% the shareholders have right to force company to buy ie put option. But without class action in Singapore, someone has to be vested enough to enforce the put option either through the company or court.

500 minorites is not an issue during takeover. But post takeover company will have to commit to spread the shareholding to remain listed as required by SGX listing rules. Usually companies will declare in the offering document whether they intend to do so. And due to nominee accounts I realised the shareholding spread in ARs are not entirely reflective.

[GFG]

Thanks for all your replies.

Share price of kep land has continued moving up on rather high vol and is not $4.55, not too far from $4.6

I can understand the motivation for selling: many SHs may not want to risk not getting the $4.6, and selling at $4.55 is already very close instead of trying to sell at $4.6 and risk ending up with $4.38 instead
But how about the buyers? If u bought the share now, there are only 2 possible intentions:
1) expect delisting and you are trying to profit from the difference. That is, the spread between the $4.53 or so and the $4.6.
If that's the case, as the share price rises, demand should drop. There's no profit after brokerage charges, to be made if u bought at $4.58 and above
2) buying the shares, declining the offer and with the expectation that kep land will come back with a better offer AFTER 1 year at least.

Question is, which one is it?

[Layman A]

Obviosly, is option 2

If a person buy at 4.55 and sell at 4.60, don't have much to earn right ?

There may be many white knights hiding below the 5% radar screen.

( Under SGX rules, if a shareholder hold more than 5% of the total share, the company need to report their share movement in the SGX company announcement column. )

Thanks for all your replies.

Share price of kep land has continued moving up on rather high vol and is not $4.55, not too far from $4.6

I can understand the motivation for selling: many SHs may not want to risk not getting the $4.6, and selling at $4.55 is already very close instead of trying to sell at $4.6 and risk ending up with $4.38 instead
But how about the buyers? If u bought the share now, there are only 2 possible intentions:
1) expect delisting and you are trying to profit from the difference. That is, the spread between the $4.53 or so and the $4.6.
If that's the case, as the share price rises, demand should drop. There's no profit after brokerage charges, to be made if u bought at $4.58 and above
2) buying the shares, declining the offer and with the expectation that kep land will come back with a better offer AFTER 1 year at least.

Question is, which one is it?

[grubb]

I think the technicality is that at 95.5% the company has right to acquire ie call option

At 90% the shareholders have right to force company to buy ie put option. But without class action in Singapore, someone has to be vested enough to enforce the put option either through the company or court.

500 minorites is not an issue during takeover. But post takeover company will have to commit to spread the shareholding to remain listed as required by SGX listing rules. Usually companies will declare in the offering document whether they intend to do so. And due to nominee accounts I realised the shareholding spread in ARs are not entirely reflective.

I found Superbowl's case which was one of those who crossed 90% but did not hit the compulsory acquisition threshold.

Announcement for level of acceptances.
http://infopub.sgx.com/FileOpen/04Mar201...eID=284859

And because there was no compulsory acquisition, shareholders had to exercise their rights under 215(3). They were sent a form to fill up.
http://infopub.sgx.com/FileOpen/20140520...eID=298087

And then a final warning that if you don't send your form, you will be left with shares in a delisted company.
http://infopub.sgx.com/FileOpen/HiapHoeF...eID=300779

And the last announcement that the company will be delisted. Shareholders who did not exercise their rights will be sent a share certificate. Those who own it under a nominee account have to contact their nominee to get the share certificate.
http://infopub.sgx.com/FileOpen/SuperBow...eID=302819


Sorry for hijacking this thread!

[Layman A]

Hi grubb ,

Thanks for the clarificaton. That's very helpful.

[Boon]

I think the technicality is that at 95.5% the company has right to acquire ie call option

At 90% the shareholders have right to force company to buy ie put option. But without class action in Singapore, someone has to be vested enough to enforce the put option either through the company or court.

500 minorites is not an issue during takeover. But post takeover company will have to commit to spread the shareholding to remain listed as required by SGX listing rules. Usually companies will declare in the offering document whether they intend to do so. And due to nominee accounts I realised the shareholding spread in ARs are not entirely reflective.

I found Superbowl's case which was one of those who crossed 90% but did not hit the compulsory acquisition threshold.

Announcement for level of acceptances.
http://infopub.sgx.com/FileOpen/04Mar201...eID=284859

And because there was no compulsory acquisition, shareholders had to exercise their rights under 215(3). They were sent a form to fill up.
http://infopub.sgx.com/FileOpen/20140520...eID=298087

And then a final warning that if you don't send your form, you will be left with shares in a delisted company.
http://infopub.sgx.com/FileOpen/HiapHoeF...eID=300779

And the last announcement that the company will be delisted. Shareholders who did not exercise their rights will be sent a share certificate. Those who own it under a nominee account have to contact their nominee to get the share certificate.
http://infopub.sgx.com/FileOpen/SuperBow...eID=302819


Sorry for hijacking this thread!

A similar case for scenario 2 is "Sakari Resources Limited"

http://www.sakariresources.com/wp-conten...mentV2.pdf

[Boon]

I suppose, technically speaking, in the outcome of a scenario 2 – it could still “evolve” into a scenario 1, subsequently - if sufficient non-accepting shareholders exercised their “rights”, under section 215(3) of the Companies Act, to "put" their shares to the Offeror – resulting in the compulsory threshold being reached.

Wondering if there was any case example on this?