Simon Cheong's offer closes on Jan 16

[reporter2]

http://www.businesstimes.com.sg/premium/companies/others/simon-cheongs-offer-closes-jan-16-20121220

Published December 20, 2012

Simon Cheong's offer closes on Jan 16

Bid at $1.80 a share comes amid market expectations of a higher offer

By Mindy Tan


SC Global Developments chairman and chief executive Simon Cheong's unconditional offer to take the company private at $1.80 a share will be open for acceptance until Jan 16, even as the market expects a higher bid to be tabled for the property firm.

The stock of SC Global closed 1.5 cents, or 0.76 per cent, lower at $1.965 yesterday.

The counter's price had shot up to a high of $2.05 on Dec 17, after Wheelock Properties raised its stake in the company through the purchase of 1.067 million shares at $1.81 apiece.

In its offer document, MYK Holdings - Mr Cheong's investment holdings company - did not allude to the key reason market watchers posit Mr Cheong is taking the company private.

Market watchers suggest that if Mr Cheong is successful in his bid to take SC Global private, and ensures that the company is fully owned by Singapore citizens, the luxury developer could potentially escape forking out up to $72 million in penalties for its remaining unsold units.

This figure could balloon to a worst-case extension charge of more than $200 million over the next three years if there are no additional sales from its projects The Marq on Paterson Hill, Hilltops and Martin No 38, according to analyst calculations.

MYK said it is seeking to delist the company given the low trading liquidity of the shares, and the fact that the company has not accessed the capital markets for funds for at least the past six years.

In addition, taking the company private will allow management to have greater flexibility in managing and planning its residential property development business, even as the company dispenses with listing-related expenses and channels its resources to its business operations.

Mr Cheong's total control in SC Global stands at over 60 per cent. Including the stakes held by Wheelock and executive director David Tsang, Mr Cheong needs approximately 11 per cent more of the company's shares to reach the 90 per cent threshold before he can delist the company.

[hopeful]

http://www.businesstimes.com.sg/premium/companies/others/simon-cheongs-offer-closes-jan-16-20121220

..........

Market watchers suggest that if Mr Cheong is successful in his bid to take SC Global private, and ensures that the company is fully owned by Singapore citizens, the luxury developer could potentially escape forking out up to $72 million in penalties for its remaining unsold units.

This figure could balloon to a worst-case extension charge of more than $200 million over the next three years if there are no additional sales from its projects The Marq on Paterson Hill, Hilltops and Martin No 38, according to analyst calculations.......
I thought that minority shareholders was forced to sell the shares and so SC Global can go 100% Singaporean. Later I read this article regarding Tangs delisting.
http://www.asiaone.com/Business/News/My%2BMoney/Story/A1Story20090803-158755.html
"Together with acceptances, the Tang family now controls 89.9 per cent. The offer is open until Aug 14, and the shares are expected to be delisted on Aug 24. For those who do not accept, it is understood they will remain shareholders - but of a private firm."

It seems that minority shareholders are not forced to sell their shares, they will remain shareholders of a private firm.

I am intending to get 1 lot of SC Global, just to ensure that SC Global is not 100% owned by Singaporeans , to ensure SC Global will not escape forking out the extension charges.

I will sacrifice this 1 lot to get cheaper units.

My question:
Is minority shareholder force to sell their shares when companies delisted and go private?

[ocean68a]

after the company is delisted, (assuming you hold on to the 1 lot and did not sell), you will be a shareholder of the delisted (private) company.

if the private company declares dividend later, you will get to receive your share of the dividend.

the private company may choose to offer to buy your 1 lot, say one year or sometime later, after the delisting.you can still choose to keep your 1 lot and not sell.

problem is you cannot suka suka sell your 1 lot as it is not liquid any more and does not have a "market" value, so to speak.

[Shanhz]

the private company may choose to offer to buy your 1 lot, say one year or sometime later, after the delisting.you can still choose to keep your 1 lot and not sell.


need to confirm if under any circumstances, they can make a forced offer for your 1 lot. say 99.9999% other shareholders all sell, and left with you, the only bugger. sure you can hold on?

[hopeful]

Thanks for the response.

Thinking further, it is damn near impossible to get 100% Singaporean shareholders in SC Global even if it gets delisted.
So those markets watchers (and me) who say that the purpose of privatisation to escape the extension charges of $72mil (1st year) by becoming 100% singaporean shareholders are probably wrong.

I think there is something deeper. Is Mr Simon selling into the rising market? or since the value of his shares rises, there is no need to meet margin call somewhere?

[ocean68a]

Hi Shanhz,
my above comments were made based on experience. i am still holdling on to some shares delisted from SGX. tks.

[hopeful]

And oh to ensure that my name is registered in the company books, I am intending to take physical delivery of the share certificate, and not leave it in the Central Depository.

and if I am the only foreign shareholder left, you think i can sell that 1 lot to Simon for $20,000?

[Shanhz]

Hi Shanhz,
my above comments were made based on experience. i am still holdling on to some shares delisted from SGX. tks.

thanks. that was helpful.

i am also holding onto some shares (not SGX), and wanted to hold all the way. but they got majority to agree to sell, and forced me to sell. i din bother to make noise coz the amt is not much.

so i was not sure if the same applies in sgp.

[hopeful]

thanks. that was helpful.

i am also holding onto some shares (not SGX), and wanted to hold all the way. but they got majority to agree to sell, and forced me to sell. i din bother to make noise coz the amt is not much.

so i was not sure if the same applies in sgp.

that's what I was afraid of.
Would the situation be different if you have the actual share certificates in your possesion?

That's why I intend to have physical share cert, and if possible, have my name printed on the certificate.

Nowadays with computer, very easy to remove your name from database and pay you cash instead. Not so with physical certs.

[Shanhz]

that's what I was afraid of.
Would the situation be different if you have the actual share certificates in your possesion?

That's why I intend to have physical share cert, and if possible, have my name printed on the certificate.

Nowadays with computer, very easy to remove your name from database and pay you cash instead. Not so with physical certs.


i have the share cert with my name printed on it.. in my cupboard. that doesn't stop them from taking it back. they ask me to send it to them, then they send me the payment for it, based on their offer price. i never even send. i am waiting to see what might happen. they already GO long time ago.. i hold on until now. because i expect 3-5 yrs later, they will go for another big bang IPO, and i wanna huat from there. but dunno whether they allow.

[ocean68a]

i tried to find out more from sgx website on SC Global but does not seem to be able to download the Exit Offer details.

i read somewhere previously that if the take up rate is more than 90%, they can exercise Compulsory Acquisition.

if you have the Exit Offer documents, perhaps you see whether there is a clause on Compulsory Acquisition.

please also see Companies Act Cap 50 Section 215(1).

[hopeful]

the link for offer document is here:
http://www.finanznachrichten.de/pdf/20121205_184547_D2S_264360DAA654FC7448257ACB0037E17A.3.pdf

[ocean68a]

Hi Hopeful,

Please see clause 7.2 of the document you attached.

my interpretation: if they can get more than 90%, they can acquire your one lot 'by force'.

tks.



disclaimer: i am just a layman, not legally trained. best if you can seek professional advice.

[hopeful]

Alamak, there goes my get rich quick plan.

can explain to me what 90% compulsary acquisition means?
since SC has 55% of the total share, remainder is 45%.
a) so SC need to get 90% of 45% = 40.5% of the total shares.
b) SC needs to get 90%-55% = 35% of the total shares.

thank you very much for the education.

[ocean68a]

i think it is b)

tks.

[DKSG]

i think it is b)

tks.

Wrong.

Simon does not need to get the full 90%.
Those hold by Wheelock is also consider part of the 90%.

SGX rules is that if there is less than 10% of company's shares in the market (ie excluding those held of corporations/brothers/sisters/aunties) ...

So technically, Simon needs less than 35%.

Sharing my little knowledge as Office Boy.

DKSG

[bargain hunter]

As of today, Simon seems to be controlling around 60% of SC.

Wheelock bought just 1m shares at 1c above simon's price to raise its stake slightly to cross 16%. the next day, share price of SC spiked and simon can no longer add to his stake.

1) its clear that wheelock will reject the current offer.
2) Wheelock's 16% stake means simon will not be able to DELIST the stock as long as wheelock disagrees. you need to have NOT MORE THAN 10% of shareholders OBJECT to the delisting for it to go through.
3) however, if the free float (that's where wheelock's 16% stake is added to simon's stake) drops below 10%, it will be enough to earn SC Global a long term suspension.
4) by spending a little money, wheelock may have done enough to prevent simon from reducing the free float to < 10% and may be able to force simon to raise his offer.

hope i got the facts right....really late now i blur blur already. :ashamed1:

[Allthepies]

Good analysis. Anyone knows what price wheel lock bought the first batch of share? Hard it is quite high. If so there will still be meat left at current price.

[hopeful]

Wrong.

Simon does not need to get the full 90%.
Those hold by Wheelock is also consider part of the 90%.

SGX rules is that if there is less than 10% of company's shares in the market (ie excluding those held of corporations/brothers/sisters/aunties) ...

So technically, Simon needs less than 35%.

Sharing my little knowledge as Office Boy.

DKSG

there are 2 issues here
a) delisting (which i think you are refering)
b) compulsary acquisition

i am referring to b)

Compulsory Acquisition. Pursuant to Section 215(1) of the Companies Act, Chapter 50 of Singapore (the “Companies Act”), if the Offeror receives valid acceptances of the Offer or acquires Offer Shares during the Offer period otherwise than through valid acceptances of the Offer in respect of not less than 90 per cent. of the total number of issued Shares (other than those already held by the Offeror, its related corporations or their respective nominees as at the Announcement Date), the Offeror would be entitled to exercise the right to compulsorily acquire all the Shares of Shareholders who have not accepted the Offer (“Dissenting Shareholders”).

it is the red wordings that is tripping my understanding.