A few days ago, CHAC and BW jointly announced the terms of the amended agreement in the takeover offer.
Things that have been changed:
1) Valuation and purchase price of BW.
The revised transaction results in a minimum valuation of Bright World at approximately USD255 million (assuming CHAC acquires all issued Bright World shares, the initial shares of CHAC issued to World Share are valued at USD9.29 per share, which is the estimated redemption value of the CHAC shares).
2) Triggers for the issuance of the additional shares
World Share's eligibility to receive additional CHAC shares has been modified by changing the triggers for the issuance of the additional shares from triggers based on the financial performance of the new company to those based on the market-based stock price performance of the new CHAC. World Share will now only receive additional shares if the stock price of CHAC reach USD12.50 per share.
3) Post acquisition cash dividend of USD0.50 per share for CHAC shareholders.
After the closing of the transaction, it is intended that CHAC shall declare and pay a cash dividend of USD0.50 per share to its shareholders of record and reduce the strike price for CHAC's currently outstanding warrants by USD0.50. World Share has waived its right to receive the cash dividend with respect to any CHAC shares it may hold.
Comments:
Personally, i view the admendments as a positive development in this takeover offer. It shows the determination of the buyers to push through this acquisition under such gloomy and uncertain economic outlook. Basically, with these changes, the buyers are clearly aligning the interest of the CHAC shareholders together with their own. I believe it is done to ensure that this deal can be approved during the voting which is to be carried out early next year. The earlier agreement announced on July 21, 2008 valued the the transaction at a minimum of about USD263 million based on the estimated redemption value of the CHAC shares of USD9.79 per share. Now the estimated redemption value of the CHAC shares is USD9.29 per share. The difference of USD0.50 will be paid as cash dividend to CHAC shareholders.
6 comments:
I agreed this move is positive for the deal. however the crux lies in the coming voting. With the abundant opportunities in the current mkt (so many discounted listco)......hmmmm..u really need to convince the sharehodlers it is worth the price !!!!
As far as mkt is concerned, nothing is confirmed until it is put into black & white. Portek is a good example.......trade with caution....
Holding Announcement
Singapore - 3 November 2008 - The Board of Directors (the "Board") of Portek
International Limited (the "Company") refers to its previous announcements dated 29
October 2007, 4 March 2008, 11 March 2008, 19 July 2008, 25 August 2008, 25
September 2008, 23 October 2008 and 24 October 2008, and wishes to provide the
update that the Company has been informed by the party (the "Party") with which the
Company has been in discussions in connection with the acquisition of shares in the
capital of the Company (the "Transaction") that the Party is not able to proceed with
the Transaction given the current weak global financial situation.
The Board wishes to make this announcement to avoid the establishment of a false
market in the Company's shares. Shareholders are advised to refrain from taking any
action in respect of their shares in the Company which may be prejudicial to their
interest, and to exercise caution when dealing in the shares of the Company.
yes you are right. nothing is cast in stone. even the takeover has been confirmed and announced, a lot of things can go wrong. jade technologies is one good example. one should always go in with his/her eyes open.
I hold some shares in this company and came across this announcement quite by chance. Should I hold on to it or sell at 28-30c? Look like the market is feeling the $0.70 price is not going to materialise at all?!
http://www.ocbcresearch.com/Article.aspx?type=research&id=20081127085324_30029
Bright World Precision Machinery: Potential breach of disclosure obligations
By Kevin Tan
Thu, 27 Nov 2008, 08:53:28 SGT
Bright World’s (BWPM) share price plunged 14.0% after the company on Tuesday announced that it had received a letter from MAS regarding a possible breach of disclosure obligations under section 203 of the Securities and Futures Act. With this uncertainty hovering over the MAS issue, it is likely to further damp mood about the viability of the pre-conditional cash offer by CHAC, which has already seen a number of hurdles. On a brighter note, we believe BWPM is likely to fulfill the profit’s targets as stipulated in the cash offer (barring steep deterioration in manufacturing activity), as it would require its 4Q08 earnings to drop significantly by 67.0% YoY and 52.7% QoQ to RMB16.3m to miss the target. Moreover, despite the slowdown and higher costs, the group’s fundamentals remain sound (comfortable net gearing of 8.4%, feasible long-term growth prospects). As such, we maintain our BUY rating and S$0.41 fair value, with view to accept offer if pre-conditions are satisfied. Key risk lies in long annualized cash conversion cycle of 219 days in 3Q08 (151 in 2Q08).
Potential breach of disclosure obligations. Bright World’s (BWPM) share price plunged 14.0% after the company on Tuesday announced that it had received a letter from MAS regarding a possible breach of section 203 of the Securities and Futures Act. This section, which pertains to continuous disclosure obligations, states that a listed entity is required to notify SGX of information on specified events or matters as they arise so that the information can be made available to the market. While a contravention of such provision may attract civil/criminal liability, we note that the development is still in its preliminary phase – the area, instance and extent of a potential breach are still not fully established, according to management. We also understand that this section precludes market manipulation (section 198) and insider trading (section 212). Nevertheless, the group intends to fully co-operate with MAS and provide the relevant information and documents sought by the authority.
Adding uncertainty to CHAC’s deal. With this uncertainty hovering over the MAS issue, it is likely to further damp mood about the viability of the pre-conditional cash offer by CHAC, which has already seen a number of hurdles. For one, the company has encountered slower sales in its stamping machines for the past quarter, resulting in a decline of 3Q08 revenue by 2.3% YoY and 22.4% QoQ. Further, the World Bank has projected China’s GDP to slow to 7.5% in 2009 even with the RMB4t stimulus package, hence implying that the slowdown phenomenon may continue to impact BWPM’s sales growth. Lastly, with the recent severe market correction, the gap between its share price and offer price has greatly widened, now representing a 185.7-206.1% premium. Roiled by uncertain macroeconomic outlook, it is unknown whether CHAC’s shareholders would vote against the offer and redeem their shares for cash during the shareholders’ meeting in 1Q09.
today see more selling aft announcement by company -- nothing new to whatever said earlier.... disppointment, I suppose.
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