Brooke Asia (formerly Latitude Tree International Group)

[VestedInterest]

Parent LTHB has offered to acquire all the subsidiaries of LTIGL. Let's take a look:

Before deal (Company level, as of 31Dec12):
Equity without subsidiaries = $40.253m - $30.102m = $10.151m.
Num shares = 239.636m

After deal:
Equity = $10.151m + $0.5118 = $10.6628m
Num shares = 239.636m - 186m = 53.636m
Per share = 19.88c

Effectively, parent is offering to take out all the lucrative businesses from minorities by paying just a cash amount of $511.8k & cancelling their shares (186m). Minorities are left with a cash shell that's worth less than the current market price (20.5c).

Another Eastern Holding.

Source: http://info.sgx.com/webcoranncatth.nsf/V...9003E0E74/$file/Latitude_ProposedAcquisition_LTHB_05022013.pdf?openelement

They have sought an extension: http://info.sgx.com/webcoranncatth.nsf/V...0000B0CAB/$file/Latitude_ExtensionOfTimeForOfferFromLTHB_28022013.pdf?openelement.
I think the deal disadvantages the minority shareholders. It is clear now why they had been conserving cash. Hence, the cash left in the shell company, was dividend not given out in the last year or so, anyway. LTHB will be getting back the rest of the business almost free. The deal should be rejected. Any Buddies have any thoughts on this?

[Gaudente]

of course the deal should be rejected !

They are stealing all subsidiaries in exchange of 511,800 $ cash and cancellation of their 186,000,000 shares.

So the resulting balance sheet of the company will be: 11,269,000 $ (net current assets at 31.12.2012) + 511,800$ = 11.780.800 $ in cash, bank deposits and advances to (ex) subsidiaries ;

while number of shares will decrease from 239,636,000 - 186,000,000 = 53,636,000

therefore book value per share after the offer will be 0.22 SGD , 3 cents less than the 0.25 SGD it was in the consolidated statements at 31.12.2012

The problem is, how can we reject this robbery if they own 78% of voting rights ?

[d.o.g.]

The problem is, how can we reject this robbery if they own 78% of voting rights ?

It would be a "Major Transaction" and also an "Interested Party Transaction" according to the SGX Listing Manual.

That means the interested party cannot vote. So it is truly up to the minorities to decide. In theory, it will depend on a simple majority vote. In practice the company's own M&A may require a 75% supermajority.

Anyone who is affected in a meaningful way would do well to seek legal advice. If the amount involved does not justify a lawyer, it may be wiser to chalk this one up to experience and move on. Live and learn, as it were.

[pianist]

Where was e red flag?

[VestedInterest]

This is the first time I am encountering such a corporate action. Maybe this is allowed in Malaysia. I will be surprised if all 3- SGX, their catalist sponsor or the independent dirctors accept such a scheme. I guess the other recourse is to write to SIAS for advice. In any case, there is going to be a decision on 28 Mar, regarding the SPA. And of course the EGM. So, it is not going to be easy as there are checks and balances here, ie on the SGX.

[VestedInterest]

They have announced a revise offer with an increase in the cash component to be paid. Still think not good enough as there is an opportunity cost if one were to hold on till the conclusion of this corporate action.

[pianist]

before shareholders approve this deal, i think they should ask what is the plan in store for the skeleton shell company. any idea?

[VestedInterest]

before shareholders approve this deal, i think they should ask what is the plan in store for the skeleton shell company. any idea?

That's the million dollar question. Probably delist after 1 year without a new business.
The furniture business should be picking up with the improvement in the US economy and home sales. Why don't they just buy out the minority shareholders? Guess they want to regain the business, the crown jewel, with minimal cash outlay.
The red flag was when they started to cut dividends without concrete plans for business expansion, new investments, etc. They also used the company to buy back a poorly perfroming LTHB subsidiary in Thailand, called Grob Holz (sounds something like that). This is a good case study and lesson actually, as alluded to by D.O.G.
I would suggest that the minorities hold out for a better offer.

[pianist]

though i am not vested, just nose around.

what kinda betteroffer are u expecting to make the minorities happy? i been thinking hard..
they just announced yesterday to up the cash consideration (to the company not shareholders) in exchange of cancellation of their shares..but...is that considered a better offer? can minorities even smell it? which brought back to your question - why don't they buy out the minorities? instead leave them dry with no revenue drivers?

[Gaudente]

With this new offer they have increased the post offer book value per share to 25 SGD cents , same as it was in 31.12.2012 consolidated financial statement.
Can't say to be happy with it , however, considering I had bought my 100,000 shares in Nov 2010 at 27 cents for their high dividend yield , dividend that last year suffered an unjustified 90% cut in spite of a much smaller reduction in earnings.
Besides, even if the most logic thing to do with a cash only company would be to disband it and distribute the cash to its shareholders, we have no assurance that's going to happen so we can't say the shares are worth their 25 cents of cash either.
Whatever way you look at it, it's a bad rip off