Fraser & Neave (F & N)

[NTL]

Are the bonds have to be redeemed first before the listing of FCL can get going?

[NTL]

F&N shareholders vote unanimously in favour of the proposed
dividend in specie distribution of FCL shares

Fraser and Neave, Limited (“F&N” or the “Company”) shareholders voted unanimously in favour of the Company’s proposed distribution (the “FCL Distribution”) of the entire issued share capital of Frasers Centrepoint Limited (“FCL”) shares by way of a dividend in specie, at an Extraordinary General Meeting (“EGM”) held today. The support votes also included those from TCC Assets Limited, which holds approximately 61.67 per cent of the issued ordinary shares in F&N.

http://infopub.sgx.com/FileOpen/Press_Re...eID=264225

[HitandRun]

Are the bonds have to be redeemed first before the listing of FCL can get going?

If you can get hold of the bond documentation, chances are that you will find a clause restricting the kind of restructuring that is contemplated by F&N.

Even so, technically, F&N can still proceed with the restructuring. The only thing is that F&N is in breach of the bond agreement (i.e. in default) and bondholders may demand a redemption of their bonds at par with accrued interests. Had the bonds been trading as a discount, bondholders might be happy to exercise the option. Unfortunately for them, the bonds were trading at quite a decent premium. Therefore, demanding for redemption is not in their interests...

To avoid all the messy scenario above, F&N is holding a bondholders meeting to approve the restructuring too. The quibble by some bondholders is that the terms are less than generous. Depending on the terms of the bond issue, the dissenting bondholders might be swept along by the majority bondholders and at the same time, lose the consent fee and maybe the prepayment fee as well.

To orchestrate the above, F&N must have been well supported by its bankers lah....

[opmi]

Bankers also want back their bridging loans $$$ they provided for the takeover Offer.

[NTL]

Are the bonds have to be redeemed first before the listing of FCL can get going?

If you can get hold of the bond documentation, chances are that you will find a clause restricting the kind of restructuring that is contemplated by F&N.

Even so, technically, F&N can still proceed with the restructuring. The only thing is that F&N is in breach of the bond agreement (i.e. in default) and bondholders may demand a redemption of their bonds at par with accrued interests. Had the bonds been trading as a discount, bondholders might be happy to exercise the option. Unfortunately for them, the bonds were trading at quite a decent premium. Therefore, demanding for redemption is not in their interests...

To avoid all the messy scenario above, F&N is holding a bondholders meeting to approve the restructuring too. The quibble by some bondholders is that the terms are less than generous. Depending on the terms of the bond issue, the dissenting bondholders might be swept along by the majority bondholders and at the same time, lose the consent fee and maybe the prepayment fee as well.

To orchestrate the above, F&N must have been well supported by its bankers lah....

I did not read the document thoroughly. What I did gathered from it was that after the split, F&N entity does not need so much funds as before, thus they have no reason to continue with the bonds. There is no mentioning of cannot split. Furthermore, split is supposed in this month, and the bond redemption is next June. That makes me puzzle.

What I do suspect is that after the split, the payment of the bonds interest will make F&N looks ugly as their interest paid will be ridiculously high compare to the profit? So will be good to take it out of the way.

[opmi]

Ya. IFAs and IDs need to up their game.

F&N takeover: a milestone in corporate governance

Business Times
Date
11 Nov 2013
AuthorLo Kim Seng
Have the efforts of the F&N directors in last year's takeover struggle raised the bar for directors in similar transactions in the future?

LAST year was a historic one for Singapore's merger and acquisition (M&A) transactions. It began with OCBC Bank divesting its controlling stake in Fraser and Neave (F&N) to Thai Beverage. This cost ThaiBev $2.8 billion.

Seeing a competitor on the board of its joint venture partner and a potential threat to its Asian beer platform, Heineken made an offer for Asia Pacific Breweries (APB) and F&N's interests in its brewery joint venture with Heineken, valuing them at $5.1 billion. This was subsequently revised to $5.59 billion.

Tycoon Charoen Sirivadhanabhakdi, controlling shareholder of ThaiBev, in the meantime continued with further open-market purchases of F&N shares, thus triggering a mandatory offer for F&N at $8.88 per share.

On Nov 15 last year, the Overseas Union Enterprise (OUE) announced a competing bid for F&N at $9.08 per share, after F&N agreed to pay a break fee of not more than $50 million should OUE's bid fail under certain conditions.

The saga ended when Mr Charoen's TCC Assets finally won control of F&N with an improved takeover offer of $9.55 per share, after the Securities Industry Council (SIC) implemented an open auction to hasten the long-drawn corporate tussle.

For professional M&A advisers, there were a number of interesting learning points from the two transactions. These included the auction process implemented by the SIC to resolve the competitive situation in the later part of the takeover transaction, the use of break fees both as a deal-protection device and as an incentive for a third party to launch a competing bid and how the chain principle is applied under the Singapore Code on takeovers and mergers.

However, from a corporate governance point of view for directors of a Singapore listed company, two interesting aspects stand out: They are the directors' efforts to bring about a competitive bid situation for F&N and the detailed response of the directors to the recommendation of the independent financial adviser (IFA).

Directors' recommendation to shareholders

The Takeover Code requires target company directors in a takeover offer to obtain competent independent financial advice on the merits of the offer. This independent financial advice, with the recommendations of the independent directors, is then made known to all shareholders so they can each make an informed decision on whether to accept the offer.

Current market practice is for the independent directors to either concur or disagree with the opinion of the IFA, and then make their recommendations to the shareholders. Where there is disagreement among the independent directors, the takeover code requires the dissentient directors to give their reasons.

However, the approach taken by the board of F&N in their recommendations to the shareholders was unusual. Instead of merely concurring with the views of the IFA and recommending acceptance of the offer, the F&N board took an approach which may set a new standard for the manner in which independent directors discharge their duties in a takeover transaction in future.

Though there was no fundamental difference with their IFA's opinion, they expressed in detail certain concerns with the IFA's findings; these concerns were in turn highlighted to the shareholders. In addition, instead of merely stating whether they intended to accept or reject the offer in respect of their own shareholdings in F&N, the F&N directors with holdings in F&N spelled out conditions under which they would accept the offer.

This approach is entirely consistent with the directors' duty to act in the best interest of the company and its shareholders and to do so with the necessary care and skill. It can be seen that in issuing their recommendations, the F&N directors have applied their minds independently to the findings of the IFA and questioned the IFA rigorously on its findings. In doing so, the board of F&N may have pushed the bar higher for directors in similar transactions in the future.

Directors' duty to maximise value for shareholders?

The starting point for directors' fiduciary duties is, as always, to act in what the directors consider - even subjectively - to be in the best interests of the company as a whole. It is not difficult to argue that this duty would include procuring the maximum value for shareholders where there is a sale of corporate control. (In this case, it was the sale of corporate control to the Thais.)

However, when only one bid lies on the table, are directors, seeking to maximise value for shareholders, duty-bound to look for other bidders in order to create a competitive situation under which the value of the target company is increased?

In the US, there are guidelines (revlon duties) which directors have to follow in certain circumstances. The basic idea is simple: The sale of a controlling interest imposes a special obligation on the directors of a listed company. Their primary obligation is to seek the transaction offering the best value reasonably available to the shareholders.

When the sale of a company becomes inevitable, the duties of the board change from managing and preserving the corporate enterprise to maximising the company's value at a sale for shareholders' benefit. Once the directors decide to sell the company, they must seek the highest-value deal that can be secured for the shareholders, regardless of whether the deal is in the best interests of other corporate constituencies, such as the company's employees, creditors and suppliers.

F&N's IFA described the offer by the Thais at $8.88 per share as "not compelling but fair". It would not have been inconsistent with current market practice if the directors of F&N merely stopped there, and proceeded to recommend the acceptance of the offer, albeit couched in careful terms that the acceptance be dependent on the individual shareholder's investment objectives and time horizons. Instead, the directors retained Goldman Sachs to seek out a competing offer. This resulted in OUE entering the fray on Nov 15, 2012 with a competing bid at $9.08 per share, incentivised with a break fee of $50 million which the F&N directors agreed to give.

This break fee permitted OUE to recoup its costs and expenses in mounting the bid, should it be unsuccessful in gaining control of F&N, since unlike TCC Assets, it did not have any shares that it could tender in acceptance of the rival offer to recoup its costs and expenses. The agreement to give this break fee enabled the F&N board to create a competitive bid situation which ultimately led to TCC Assets' improved offer at $9.55 per share and increasing the value of the company by $1 billion.

Has the bar been raised for independent directors?

Given the above, it is arguable that the bar may have been raised for independent directors in the discharge of their duties during a public M&A transaction. Independent directors may no longer just sit back and appoint an IFA, but will need to be seen to ask a lot of tough questions, even of the IFA.

A recommendation to the shareholders to either accept or reject the offer following the issue of the IFA's opinion, without more, may no longer be sufficient. After F&N, savvy shareholders may rightly ask directors for their views on an offer, that is, other than in the terms proffered by the IFA; it may no longer be enough to rely wholly on the text of the IFA's opinion when independent directors make their recommendations to shareholders.

Similarly, one may argue that the duty to act in the best interests of the company and its shareholders during a takeover offer is simply the duty to maximise the value of the shares that are being sold. One way of doing so is to create a competitive bid situation, using the break fee as a device to incentivise a competing bidder, as illustrated by the F&N transaction.

However, because of the tight timetable imposed by the takeover code and the fact that many listed companies are more than 51 per cent controlled by a single controlling shareholder, it may be challenging for independent directors to create such a competitive bid situation.

Another way for independent directors to engage the bidder would be for the directors to make it clear to the bidder that unless the best possible deal has been put before the shareholders, they will not recommend or recommend the acceptance of the offer strongly.

In the takeover of WBL Corporation recently, even though United Engineers (UE) offered a higher price ($4.15 per share) than Straits Trading's offer of $3.36 per share, UE's offer was not recommended by the independent directors until the offer price was increased to $4.50 per share.

The writer is a director at Stamford Law. His practice is primarily in capital markets, mergers and acquisitions, corporate and commercial.

[CityFarmer]

Let's see the result, the announcement should be available by end of today ...

F&N to meet with bondholders over changes to terms of holdings

SINGAPORE — The push by Fraser and Neave (F&N) to spin off and list its property arm Frasers Centrepoint Limited (FCL) may come to a head today when the conglomerate meets its bondholders in an attempt to settle terms related to the demerger.

At the meeting, F&N is likely to seek acceptance for the price it has put on the table to redeem six series of outstanding bonds worth S$808.25 million even though some bondholders are reported to be unhappy with the offers the company has made.

If F&N chooses to push on with the spin-off without the bondholders’ agreement, the blue-chip company would trigger a technical default.
...
http://www.todayonline.com/business/fn-m...s-holdings

[NTL]

What is the implication? Dangle a bigger carrot?

Results of Meetings of Noteholders and Bondholders

Results for Series 003 -
The Company is pleased to announce that the Extraordinary Resolution tabled at the meeting of the holders of the Notes on 14 November 2013 has been duly passed as an Extraordinary Resolution of the holders of the Notes without any amendment.

Results for Series 009 -
the Extraordinary Resolution tabled at the meeting of the holders of the Series 009 Notes on 14 November 2013 has not been passed

Results for Series 010 -
the Extraordinary Resolution tabled at the meeting of the holders of the Series 010 Notes on 14 November 2013 has not been passed

Results for Series 011 -
the Extraordinary Resolution tabled at the meeting of the holders of the Series 011 Notes on 14 November 2013 has been duly passed as an Extraordinary Resolution of the holders of the Series 011 Notes without any amendment

Results for Retail Bonds (5yr) -
the Extraordinary Resolution tabled at the meeting of the holders of the 5-Year Bonds on 14 November 2013 has been duly passed as an Extraordinary Resolution of the holders of the 5-Year Bonds without any amendment

Results for Retail Bonds (7yr) -
the required quorum was not achieved at the meeting of the holders of the 7-Year Bonds on 14 November 2013. Accordingly, the meeting of the holders of the 7- Year Bonds has been adjourned. Subject to finalisation of all relevant arrangements, the meeting is expected to be reconvened for 3.30 p.m. (Singapore time) on 29 November 2013

[CityFarmer]

What is the implication? Dangle a bigger carrot?

IMO, technical defaults for those bonds didn't pass the resolution.

F&N is readied to fulfill the liabilities, and the FCL listing is not conditional on bondholders' approvals.

Yes, it will be a scratch, not a dent on F&N credibility, IMO

(vested)

[NTL]

What is the implication? Dangle a bigger carrot?

IMO, technical defaults for those bonds didn't pass the resolution.

F&N is readied to fulfill the liabilities, and the FCL listing is not conditional on bondholders' approvals.

Yes, it will be a scratch, not a dent on F&N credibility, IMO

(vested)

Die die they want to kill the bonds?

From a report I read, if they really default those bonds, they may have issues borrowing in the future.