With its professional judgement called into question by SIAS over a listed company's delisting proposal, an Independent Financial Adviser (IFA) unleashed a lengthy rebuttal yesterday.

W Capital Markets is the IFA appointed by Golden Energy & Resources (Gear) to provide an opinion for the proposed distribution in-specie of its GEMS shares to Gear shareholders and an exit offer.

Gear owns stakes in Indonesian thermal coal player GEMS, metallurgical coal player Stanmore Resources, and unlisted Aussie gold miner Ravenswood Gold. 

SIAS, on its website on 30 May 2023, had said: 
• “Disappointingly, the IFA has conflated the two corporate actions despite SIAS’ highlighting this specific concern at the meeting with GEAR”

• “Clearly, SGX RegCo’s reminder to the IFA regarding the utilization of appropriate valuation methodologies and the necessity for analysis supported by reasonable grounds and assumptions capable of withstanding scrutiny has seemingly fallen on deaf ears”

• “SIAS feels that the IFA has not met the expectations set specifically by SGX RegCo”.


crane4.17
W Capital said it wished to "categorically refute the above allegations which we view to be misconceived and injurious."

Its response covers: 

1. Scope of the IFA's opinion and allegation of conflating of two corporate actions
2. Approach taken by IFA for the valuation of GEMS Shares
3. Valuation methodologies adopted in respect of the assessment of the Proposed Distribution and Exit Offer

Firm belief

WayneLee W Capital

“W
e firmly believe that our IFA opinion in respect of the Proposed Distribution and Exit Offer is based on appropriate valuation methodologies and supported by reasonable grounds and assumptions."

-- Wayne Lee,
Chairman & CEO,
W Capital Markets

W Capital concluded: "Whilst we acknowledge that no single method of valuation will be met with universal acceptance and we humbly respect differences in views and opinions, the Board of W Capital Markets would like to put on record that we have always been mindful and use our best endeavours to ensure that we exercise due care, skill and professional judgement in all advisory engagements and firmly believe that our IFA opinion in respect of the Proposed Distribution and Exit Offer is based on appropriate valuation methodologies and supported by reasonable grounds and assumptions."

W Capital's full response can be found here.

The Business Times on 29 May 2023 had also taken issue with W Capital's opinion on Gear's offer.

Business Times senior correspondent Ben Paul opined that the IFA opinion is faulty as:

(i) the IFA has valued the stake of Gear in its Indonesia-listed thermal coal arm (GEMS) inappropriately in its sum-of-the-parts model; and

(ii) the IFA has not provided any analysis on whether the exit offer for Gear (which takes place after its Indonesian arm has been separated) is fair and reasonable.


W Capital's response covers:

1. Approach taken for the valuation of GEMS Shares
2. IFA opinion in respect of the Proposed Distribution and Exit Offer


W Capital's full response can be found here.

Gear, for its part, also issued a response to SIAS's "inaccuracies and omissions" reportd by Business Times and The Straits Times, in particular, SIAS’ commentaries on:

(i) the scope of the IFA's opinion, the IFA “conflating the two corporate actions”, and the IFA’s utilisation of methodologies in its opinion; and

(ii) the framing of the Company’s corporate actions to Shareholders as being two simple decisions. 
"The Non-Conflicted Directors maintain their recommendation to Shareholders to vote in favour of the Distribution Resolution and the Delisting Resolution, and to accept the Exit Offer."

- Golden Energy & Resources
Notably, Gear said the "Non-Conflicted Directors" of Gear concur with the IFA’s approach for the valuation of the GEMS shares and the valuation methodologies adopted in the assessment of the Proposed Distribution and Exit Offer.

The Non-Conflicted Directors who are considered independent for the purpose of making the recommendation to Shareholders in respect of the Proposed Transactions are: (a) Mr. Dwi Prasetyo Suseno; (b) Mr. Mark Zhou You Chuan; (c) Mr. Mochtar Suhadi; (d) Mr. Lim Yu Neng Paul; (e) Mr. Lew Syn Pau; (f) Mr. Irwandy Arif; and (g) Ms. Noormaya Muchlis

The Non-Conflicted Directors maintain their recommendation to Shareholders to vote in favour of the Distribution Resolution and the Delisting Resolution, and to accept the Exit Offer.

The all-cash offer -- ie a Gear shareholder accepts cash for his GEMS entitlement in addition to cash for the delisting of Gear -- is a total of 97.3 cents for every Gear share he holds. Gear last traded at 94.5 cents yesterday.


>> Gear's full response -- as a filing on the SGX website -- can be found here

>> Gear's circular to shareholders can be found here. 

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