EDMI

[cif5000]

Based on the extract from the article above, doesn't it seem like SMB's already 'secured' the delisting? i.e. Their own stake plus the 13 SMB shareholders' stake that's been pledged.

There will be 2 EGMs - one for SMB and one for EDMI.
The undertaking is for the 13 SMB shareholders to vote for the resolution in the SMB EGM.

For EDMI, the delisting resolution will need 75% for AND not more than 10% against for it to go through.

For delisting to take place, SMB’s shareholding in EDMI must cross 90%.

If the EDMI resolution is passed, than EDMI doesn't need to cross 90%.

[dydx]

Is it better to invest in parent SMB United?

It is fair to say EDMI is now the 'crown jewel' among SMB United's core businesses, the biggest of which is the low-voltage switchgear division....
http://www.smbunited.com/our-business/switchgear/
which did not do very well in FY10.....
http://www.smbunited.com/wp-content/uplo...FY2010.pdf [see Note 13 of the FY10 results announcement]

That fact that SMB United is willing to incur the financial and other resources and the extra work to privatize EDMI simply means that SMB United's controlling shareholders/senior management and BOD see a lot more and growing business/investment values in each EDMI share than their announced $0.365/share offer price, plus long-term strategic importance in EDMI's fast-growing smart meters business that SMB United should own 100% of EDMI.

I guess existing EDMI shareholders should simply sit on their shares and wait for SMB United to willingly up the offer price to a fair level - closer to the corresponding intrinsic value of each EDMI share.

If SMB United succeeds in privatizing EDMI at a low overall cost, perhaps Mr Market may reward the counter with a temporary cheer! If privatized, SMB United will have to pool the enlarged group's resources to support the further growth of EDMI's business, which will take some time to achieve before the expected bigger profits can be realized. No matter what, SMB United will have to look at EDMI's business for the longer term, unless of course there is already an intention to sell the business to the highest bidder in the future.

At this point, I think EDMI shareholders should think about what's a fair value for their now higher priced and obviously more valuable shares. As for me, I see $0.50 as a reasonable figure, considering EDMI's smart meters business is already quite well established internationally - with on-going access to and relationship with many national power generation/distribution companies as direct customers - and poised to grow further on a profitable basis, backed by a good historical track record.

[kazukirai]

Hey guys,

Thanks for the clarification!

So, in essence, SMB shareholders need to vote at the EGM to EDMI (their subsidary) and this is likely to go through while on the other hand, EDMI shareholders also need to vote at an EGM regarding the delisting (which requires at least 70% for AND not more than 10% against) but this is probably, as of writing, not likely to happen given their offer price.

Am I right to say so?

[portuser]

cif5000
Thanks for bringing clarity to the subject of delisting.
I should highlight that securing "at least 75% of the total number of issued EDMI Shares held by EDMI Shareholders present and voting, on a poll, either in person or by proxy at the EDMI EGM" alone is not sufficient. To delist, the dissenting votes must not be "10% or more of the total number of issued EDMI Shares held by EDMI Shareholders present and voting, on a poll, either in person or by proxy at the EDMI EGM".
If minority shareholders turn up in force at EGM, or appoint proxies to vote against delisting, EDMI may survive, and continues to deliver excellent profits to its shareholders.

Before the EGM is called, minority shareholders should band together and signal to SMB that the delisting resolution is likely to be defeated. SMB may then be prompted to better its offer.

[lyekf]

EDMI minority shareholders can ask SIAS to voice out their concern for them.

[xlandjy]

cif5000
Thanks for bringing clarity to the subject of delisting.
I should highlight that securing "at least 75% of the total number of issued EDMI Shares held by EDMI Shareholders present and voting, on a poll, either in person or by proxy at the EDMI EGM" alone is not sufficient. To delist, the dissenting votes must not be "10% or more of the total number of issued EDMI Shares held by EDMI Shareholders present and voting, on a poll, either in person or by proxy at the EDMI EGM".
If minority shareholders turn up in force at EGM, or appoint proxies to vote against delisting, EDMI may survive, and continues to deliver excellent profits to its shareholders.

Before the EGM is called, minority shareholders should band together and signal to SMB that the delisting resolution is likely to be defeated. SMB may then be prompted to better its offer.

Yes. With the help of the internet, lets flex our muscles. I have 900 lots and I ain't gonna sell to them. My email add is xlandjy@yahoo.com.sg.

[dydx]

Based on last night's (5Apr11) update announcement, parent SMB United has secured 68.22% of EDMI todate.....
http://info.sgx.com/webcoranncatth.nsf/V...9003A86EA/$file/Dealings_Announcement_0504.pdf?openelement

As evidenced by the fact that for the whole day yesterday, SMB United only managed to pick up a meagre 22 lots, there are now fewer and fewer EDMI shareholders who are prepared to accept the GO price of $0.365.

In fact, since yesterday (5Apr11) and also this morning, there has been sporadic buying at $0.37. Some smart money at work? Great!

[dydx]

Just finished reviewing EDMI's latest FY10 (ended 31Dec10) AR which makes interesting reading.....
http://info.sgx.com/listprosp.nsf/07aed3...2002a8a0b/$FILE/EDMI_AR10_SGX.pdf

Just based on the solid growth in both business volume and profit in FY10, and the positive business outlook given by MD Lee Kwang Mong and Executive Chairman Lee Phuan Weng in their Letter to Shareholders, my simple conclusion is that there is no compelling reason at all to accept parent SMB United's privatization offer at $0.365/share.

Having taken a good look at the Statistics of Shareholdings (p91 and p92), I believe there is already enough support from minority shareholders among the "20 Largest Shareholders" to form a >10% "blocking vote" in the coming EGM - as fund manager Yeo Seng Chong alone already holds a combined 5.34% stake.

Therefore, I think I shall just hold on to my EDMI shares and chip in to block the unreasonably priced privatization offer by parent SMB United.

[dydx]

I notice in the last hour of trading yesterday (19May11), a few investors have cleared nearly all the sellers queuing at $0.37 and bought a total of 812 lots. I thought this is a very good sign!

[portuser]

SMB, which now owns the whole of EDMI, has announced the award of SMB performance shares to Mr Lee Kwong Mong if EDMI's total profit for the next three years exceeds $62m.
It is good that SMB has made public the criteria for the award.
EDMI's profit was $9.7m in 2010. Profit in 2011 may be around $12m, based on SMB's results announcements.
If EDMI has projected orderly growth at 30%, its yearly profit between 2012 and 2014 will be:
2012 $15.6m
2013 $20.1m
2014 $26.1m;
making a total of $61.8m.

If this optimissim is not without basis, SMB had been shrewd the privatising EDMI.