Superbowl -- grossly undervalued

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13 Oct 2013 18:28 #16713 by Big Fish
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.

Begs the question: Why?

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14 Oct 2013 14:08 - 14 Oct 2013 14:13 #16729 by sumer
Hi Big Fish,

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!
Last edit: 14 Oct 2013 14:13 by sumer.

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18 Oct 2013 01:13 #16873 by Big Fish
The tension is rising. I can feel it on seeing the Q to buy at 74 cents. The buyers are clearly not just looking at 1-ct profit upside to the takeover offer price of 75 cents. No way!

They are buying for a bigger prize. It shall be apparent over time.

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19 Oct 2013 00:50 #16901 by crabcrab
Superbowl ($0.735) - Superbowl privatization reminded me of the bitter CK Tang privatization saga. However, it looks to me that the privatization of Superbowl is gonna be a failed attempt as acceptance level may likely fall below the 90% mark, unless the price of offer s revised It may be interesting to see if the share price of Superbowl hitting above the offer price when the date of Hiap Hoe EGM is nearer... Interestingly, Hiap Hoe, in their announcement thru SGX, did not indicate firmly that they will not revising their offer price, unlike CK Tang.....Vested(crabcrab vested in both HH/Superbowl & CK Tang)

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19 Oct 2013 11:44 - 19 Oct 2013 11:45 #16902 by sumer
Hi crabcrab, I think it depends on what you think is the main reason behind the takeover offer. Imo, the main reason is because HH Holdings need the funds to settle the shareholding changes in the holding co, because:

1. The timing: This exercise came at the same time as the sons & others settled the family dispute. I believe this involved buying out the father's substantial stake in HH Holdings, which I estimated at $100m, while others see it at $200m.

2. The amount: At $100-200m, this is a large sum, and the parties could have taken a short term loan for it, which will need to be paid back, via the money HH will pay HH Holdings for buying over the latter's SB shares.

3. The terms: As you said, the 90% condition for takeover is "movable", and if the above reasons are valid, then it will be moved as delisting, while preferred, is not the priority.

Nevertheless, the above is just some educated guesses, and it's possible I am wrong.
Last edit: 19 Oct 2013 11:45 by sumer.

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19 Oct 2013 20:59 #16915 by nobody
I do not think that HHL is serious about delisting Superbowl. Everything started from the buy out of elder Teo shares in their private vehicle, HHH.

The management probably knows and expects minority shareholders of superbowl to reject the offer price of 75cents. But they got to do it and offer at 75 cents so as to 1) pay for the elder Teo's shares and 2) entice minority shareholders of HHL to support the offer.
And why shouldn't the minority shareholders of HHL support the offer? Rejecting the offer will probably result in plunging of HH share price.

With that in mind, the likely scenario will be

HHL managed to get around 75 to 80% of the superbowl.
Superbowl remains as listed company with perpetual rumours of another higher offer coming ...something like wheelock properties. "boring company with excitment surging once every few months/years"

HHL will be quite interesting in contrary. With excess cash at HHH, will the Teos be tempted to do an offer to delist HHL instead?

Or will HHL try another attempt to delist superbowls as by then the majority shareholders will be allow to vote ?

in my view, HHL seems a better investment option than Superbowl as both offers (HHH to HHL or HHL to super)will likely to result in higher share price for HHL.

And even if both offers never materialise, there is still a RNAV of above $2 to fall back on......

Just my view...

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