Viva, yes your are right. You are not obligated to sell.
In fact, I added both Superbowl and Hiap Hoe today. I suspect the offer has to be raised in order for HH to get more than 90% of the shares.
As for Hiap Hoe, I think the RNAV can shoot up to $2.20-2.50 if you include the outstanding profits from Waterscape and if we assume it's going to make money from its Melbourne projects. My only concern is its gearing, and it becoming a bit of a value trap. Will have to watch what management does going forward, in terms of dividend payout, bonus issues, monetization of its assets, successful sales of its Melbourne apts, etc.
HH/SB announced last evening that Mr Teo Guan Seng is no longer a deemed shareholder of both companies, following the sale of his stake in HH Holdings Pte Ltd (the parent co which owns about 70% each of HH and SB). This perhaps explains the takeover offer for SB.
If the rest of the shareholders of HH Holdings had taken a loan to buy over the father’s stake, the latest corporate restructuring will return cash to HH Holdings via the sale of SB, and yet help retain the family’s hold on HH’s and SB’s assets. If this guess is correct, I expect the takeover to be a success, despite the “conditions” set for the exercise.
The interesting part for Hiap Hoe is that its NAV will surge to $1.98 post the exercise, as they take into consideration the full value of ZP and the asset-accretive value of SB.
I am not sure if Hiap Hoe will raise the offer price, but even if it does not, SB shareholders can opt to accept the 75ct offer and ride on HH shares instead.
HH will be a much larger animal post this restructuring. But its gearing may increase quite a bit (partly also due to Aussie land purchases), so it will be interesting to see if it monetizes any of its assets after that.
The co is also trying harder to sell remainder units at Waterscape, and the profits from this project would boost RNAV above $2 per share. If it gets its Melbourne card right, RNAV will get another boost. Melbourne could potentially gross the company a couple of hundred of millions in profit if everything goes well.
Sumer, I reckon that indeed the elder Teo had sold out to his children in HH Holdings but the latter will definitely need to have Hiap Hoe buy over their Superbowl shares in order for HH Holdings to finance the purchsae of the elder's stake in HH Holdings.
It follows that the privatisation of Superbowl has to succeed = possibly a higher offer price later in order to secure >90% agreement. either that or a lower % threshold with the blessings of the SIC.
I would be inclined to hold tight to my Superbowl shares for now ......
Has anyone noticed that Francis Siah Ooi Choe recently bought 1 m shares at 73.8 cents, and became a substantial shareholder of Superbowl?
Why? Is it just to make the small difference between offer price of 75 cents and 73.87 cents ? There's hardly any meat left after counting the broker's commission.
Siah’s purchase of shares after the SB takeover news is interesting. His deemed (Elinton & Geraldine) and personal interests now add up to more than 5% of SB shares.
Should he vote against the takeover offer, and 2 other top shareholders’ (ie, Morph Inv with 2.81% and Pang with 1.13%) happen to do likewise, then HH will probably not obtain 90% acceptance, and the 90% condition is not met.
Some investors fear that without 90% of SB shares, HH will not launch the takeover. However, I suspect that HH is likely to use this condition only as a “push” factor, and that it will simply lower it to below 90%, perhaps because HH Holdings (the parent of HH and SB) needs cash to settle the stake changes within the family.
There are 2 rounds where this takeover exercise may be blocked. The first round is at HH EGM, where consent will be sought from minority shareholders for the takeover of SB. HH, however, has no big minority shareholders, unless some are hiding under nominee names (CIMB, DBS, OCBC, HSBC etc). As such, I don’t see any block here.
Once that is done, the offer will be made to SB shareholders. Since HH Holdings already owns about 71.5% of SB shares, it can simply tweak the 90% condition to ensure that the deal goes through, even if it means not delisting SB.
However, if I were the Teos, I would still aim for 90% offer acceptance and delist SB, because it costs very little for HH to lure the non-Elinton shareholders to the honey – I suspect just raising the offer price to 90cts (15ct more for the remainder approximate 92.7m shares equals only $14m!) will do the job.
The benefits to HH Holdings far outweighs that $14m. For one, it paves the way for a future takeover of HH itself, without the farce of SB still being a listed entity. Since HH’s NAV will shoot pass $2 post-takeover, an offer of $1 for HH shares will be another steal.
In fact, if HH takes over SB at 90ct, HH Holdings & concerted parties will receive nearly $210m. If $100m is used to settle HH stake changes, the leftover is $110m. If they then successfully offer $1 each for the remainder 29.1% HH shares in the public’s hands, it will only cost them $137m. In other words, all HH Holdings & concerted parties need to do is to come out with a net $27m ($137m - $110m) to privatize both HH and SB!
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