Fraser & Neave (F & N)

[freedom]

next one? Thai Beverage swaps its FCL shares with TCC's F & N shares? Thai Beverage to absorb F & N?

Anything is possible. I don't try to outsmart the Towkay's team.

F&N and ThaiBev remain as separated, and engage in a synergistic way, by leveraging on both logistic networks? May be...

towkay need $$$ to repay loan....so how Towkay get $$$ to deleverage?

sometimes debt laden companies more shareholder friendly than cash-rich fat cats...

Not necessary. What TCC needs is merely the interest payment only. F&N + FCL's dividend can cover that part well enough.

Further how TCC restructures FCL is anyone's guess. but one thing is that TCC can't reduce its stake in FCL in two years(? can't remember exactly in the circular)

FCL still has good asset to monetize.

[opmi]

next one? Thai Beverage swaps its FCL shares with TCC's F & N shares? Thai Beverage to absorb F & N?

Anything is possible. I don't try to outsmart the Towkay's team.

F&N and ThaiBev remain as separated, and engage in a synergistic way, by leveraging on both logistic networks? May be...

towkay need $$$ to repay loan....so how Towkay get $$$ to deleverage?

sometimes debt laden companies more shareholder friendly than cash-rich fat cats...

Not necessary. What TCC needs is merely the interest payment only. F&N + FCL's dividend can cover that part well enough.

Further how TCC restructures FCL is anyone's guess. but one thing is that TCC can't reduce its stake in FCL in two years(? can't remember exactly in the circular)

FCL still has good asset to monetize.

Depends on level of TCC debt used to take over FNN. It is a LBO. At 30% LTV, service interest payments can liao. At 60-70%, better pay it down or lose it at the next downturn.

Towkay will want to get hands on 100% of FNN cashflow. cannot do it if owned less than 100%.

As mentioned by others here, best way to rip cash out is sell assets to FCL. FCL debt level will likely to go up...

[freedom]

Not necessary. What TCC needs is merely the interest payment only. F&N + FCL's dividend can cover that part well enough.

Further how TCC restructures FCL is anyone's guess. but one thing is that TCC can't reduce its stake in FCL in two years(? can't remember exactly in the circular)

FCL still has good asset to monetize.

Depends on level of TCC debt used to take over FNN. It is a LBO. At 30% LTV, service interest payments can liao. At 60-70%, better pay it down or lose it at the next downturn.

Towkay will want to get hands on 100% of FNN cashflow. cannot do it if owned less than 100%.

As mentioned by others here, best way to rip cash out is sell assets to FCL. FCL debt level will likely to go up...

TCC can consolidate FCL & F&N's financial result into its own. The banks will look at the whole group, rather than individual companies within the group.

I doubt TCC will simly take advantage of FCL's minority shareholders by injecting assets. It does not reflect well. A honorable man will do it honorably and fairly. TCC can team up with FCL to monetize the assets instead of injecting assets directly.

You are belittling the man.

[opmi]

Not necessary. What TCC needs is merely the interest payment only. F&N + FCL's dividend can cover that part well enough.

Further how TCC restructures FCL is anyone's guess. but one thing is that TCC can't reduce its stake in FCL in two years(? can't remember exactly in the circular)

FCL still has good asset to monetize.

Depends on level of TCC debt used to take over FNN. It is a LBO. At 30% LTV, service interest payments can liao. At 60-70%, better pay it down or lose it at the next downturn.

Towkay will want to get hands on 100% of FNN cashflow. cannot do it if owned less than 100%.

As mentioned by others here, best way to rip cash out is sell assets to FCL. FCL debt level will likely to go up...

TCC can consolidate FCL & F&N's financial result into its own. The banks will look at the whole group, rather than individual companies within the group.

I doubt TCC will simly take advantage of FCL's minority shareholders by injecting assets. It does not reflect well. A honorable man will do it honorably and fairly. TCC can team up with FCL to monetize the assets instead of injecting assets directly.

You are belittling the man.

No. I am referring to the tried and tested option of getting cash fast out of a company. That life in the real world where everyone is looking out for no. 1. Alignment of interests is better than fair and honor, in area of investment.

I also hope for a day when fairness and honor prevails. Then no need code of corp gov and independent directors and IFAs liao.

Accounting profits cannot pay debts one. To get hard cash to repay debt, company better to have 100% ownership. If not, troublesome and leaky. Cashflow leaked to minority investors. So if want to see more dividends from FNN, better reject any share swap. U want to be the toll booth between TCC and FNN. But don't know who are the minority shareholders now after compliance placement.

[Andrewgoh]

Hmm i not really sure about a share swap and taking fnn drinks private.. their previous deal Sermsuk was also left listed after taking a huge stake.

More interested to think of what to do with the shares and how mr market will value them post XD.. Thinking whether to dump FCL after it is listed or to hold on hoping that they will sell some of the assets in FCL away. Not forgetting Fraser Centrepoint Trust (FCT)'s gearing is low for now, it could also dispose some of its malls into FCT to recycle cash back to FCL i.e Changi City Point mall and the ultimate Centrepoint

[wizguy84]

have been following as the things unfold.
has it been announced what will be the listing price of FCL and the price of F&N on 9 Jan? how will the prices be determined? anyone knows?

[freedom]

It is listed by introduction. So the market will decide its price when it starts trading.

I believe it is inevitable that Thai Beverage will take F & N private. It is not in the interest of Thai Beverage to continue to hold FCL shares. The easiest way out would be to swap its FCL shares with TCC's F & N shares. After that, Thai Beverage will control around 90% of F & N shares. Unless Thai Beverage intends to divest a significant part of its F & N shares to bring the public float to around 30%, F & N will behave just like APB before the whole saga. The public float of APB was so low that it constantly was traded below its fair value. F & N will be just traded like that and if the company does share buyback to improve its value, it will be too easy to reduce public float to below 10%, again, Thai Beverage has to make an exit offer. From all angles, it is hard to maintain the public status of F & N after Thai Beverage swaps its FCL shares with TCC's F & N shares.

[Andrewgoh]

Well I do agree that it is also possible that they can consol and take private given they form a subsi IBHL maybe the vehicle for the assets they bought...

just something crazy up my mind, if we had examined the structure of FCL and Capitaland observe their business model, there seems to be strong similarity behind them (in terms of lines of business, geographical area and D/TC roughly 50%). If we were to continue on this line of thought and expolate.. Capitaland is trading at 0.80x its NAV (latest mkt close/BS NAV) ($3.02/3.74) and if we were to apply that discount to FCL which has a 1.88 NAV cost based on 12 Nov then a per lot FCL would be worth $1.50 if traded today. As 1 lot of FNN would yield 2 lots of FCL, that would bring FNN (post XD) to be worth $3 (assuming $6 - $3), that is means an implied PER of 20X. just some quick back of envelope calcs over kopi.

[CityFarmer]

Well I do agree that it is also possible that they can consol and take private given they form a subsi IBHL maybe the vehicle for the assets they bought...

just something crazy up my mind, if we had examined the structure of FCL and Capitaland observe their business model, there seems to be strong similarity behind them (in terms of lines of business, geographical area and D/TC roughly 50%). If we were to continue on this line of thought and expolate.. Capitaland is trading at 0.80x its NAV (latest mkt close/BS NAV) ($3.02/3.74) and if we were to apply that discount to FCL which has a 1.88 NAV cost based on 12 Nov then a per lot FCL would be worth $1.50 if traded today. As 1 lot of FNN would yield 2 lots of FCL, that would bring FNN (post XD) to be worth $3 (assuming $6 - $3), that is means an implied PER of 10X while the rest of asia F&B stocks trade at levels near 20X (even FNN Malaysia is 21X) which means that could be potentially alot more upside in the CE-XE demerger trade. just some quick back of envelope calcs over kopi.

Base on the latest DIS presentation slides, which based on Jun 2013 financial data

The post-DIS FCL's per share NAV is $2.04, while F&N's per share NAV is $1.69

Ref: http://infopub.sgx.com/FileOpen/Investor...eID=254081

[freedom]

Hi Andre,

I don't know how you calculate the implied PER. But from my simple calculation that it is far beyond 10x.

F&N - FCL PBIT for FY2013 was only around 220 million (slide 6 of the F&N group presentation). 3 * 1.4 billion shares = 4.2 billion market value. Implied PE(E before tax) is almost 20x.