Reach Energy: Potential Risk Arbitrage? (2)

Recall in an earlier posting that highlighted the risk arbitrage deal offered by Reach Energy listed company shares. Fast forward to 15 November 2016, it had successfully obtained sufficient shareholder approvals to acquire an oil and gas outfit.

The option to vote officially expires on 28^th October 2016 where if you are a shareholder up till the end of business day, you have the right to attend the EGM and cast your vote on the acquisition. Shareholders who voted against the acquisition would have gotten back approximately RM0.76 per share as per the following Bursa stock exchange announcement made by the company via a share purchase mechanism:

http://www.bursamalaysia.com/market/listed-companies/company-announcements/5271517

Shareholders focusing solely on extracting the risk arbitrage spread offered by Reach would have earned a decent premium. However, the share repurchase price paid by the company is subject to the qualifying acquisition going through. Christmas indeed came early should you have bought into Reach below RM0.70 per share price levels.

This post will end the story for Reach risk arbitrage chapter.

Note: This is not an investment advice. Buy and sell any securities at your own risk.

Disclosure: None.

Hwang Capital: Potential bumper dividend round 2? (3)

Recall in an earlier posting that highlighted the takeover offer by Hwang major shareholders. It was speculated that another major stakeholder DBS would accept the offer but the parties agreed for acceptance did not work out as expected as per news article summarized below:

http://www.thestar.com.my/business/business-news/2016/07/02/takeover-offer-for-hwang-capital-turns-unconditional-and-acceptances-period-extended/

http://www.thestar.com.my/business/business-news/2016/10/10/hwang-capitals-conundrum/

Since the company’s share has been suspended there will be no room for entry or further opportunities and this post caps off the Hwang privatization journey.

Note: This is not an investment advice. Buy and sell any securities at your own risk.

Disclosure: None.

Golden Land Bhd: Special dividend and capital repayment as catalyst for share price uptrend movement? (2)

Recall in an earlier blog posting that yours truly had speculated on the potential share price uptrend movement due to 2 separate cash distribution and the perceived margin of safety for the intrinsic cash value post distribution.

The trade did not work out as expected as share price took a dive following the special dividend ex-date on 28 March 2016. Announcement of capital repayment did not have the desired effect as well.

Reasons that could explain the downtrend may be expected heavy capital outlay for investment in plantation land that could lock up cash reserves. Other than that it was a value trap so far that trapped my investment funds which did not see any growth for more than 6 months.

This will be the last of Golden Land posting until there are any new corporate developments.

Note: This is not an investment advice. Buy and sell any securities at your own risk.

 


Disclosure as at time of publication: Long Golden Land Berhad.

Hwang Capital: Potential bumper dividend round 2? (2)

Recall in an earlier posting that yours truly has speculated on the possible bumper dividends for the 2^nd time coming from Hwang.

In a surprise turn of events, Hwang had announced on Bursa Malaysia that its major shareholders, holding about 30% of total shares outstanding in Hwang Capital intend to launch a conditional takeover offer for the remaining 70% shares outstanding for Hwang Capital at RM2.65 per share, a decent premium of about 16% from current share price of RM2.21.

The share price had a brief run up in late March, almost breaching the RM2.65 levels before share price took a dive following an announcement that it will be extending timeframe for acquisition of new business for another year to April 2017.

Shareholder wishing to sell back their shares to Hwang at RM2.65 can do so should Hwang able to control more than 50% of voting shares after tabulating all valid acceptances to the offer.

A quick check on the shareholder register showed another substantial shareholder, DBS bank, which is in turn controlled by Temasek, Singapore’s sovereign wealth fund, with the potential in becoming the kingmaker in this deal. Its stake at a price of RM2.65 is valued at approximately SGD61 million, chump change compared to its huge asset base. The author is of the view that likelihood of DBS selling away the stake is high, thus paving way for an eventual delisting, which is incidentally the major shareholder’s desired intention.

Minority resistance may surface due its substantial discount of 21% compared to its NTA of RM3.22 per share. However, low interest rate environment and a continued delay may force shareholders to sell in view of the dimming prospects for its only core moneylending business.

Ultra patient shareholders may finally see light at the end of tunnel after holding on to Hwang shares. Since the bumper dividend on April 2014, share price has been on a steady uptrend from a low of RM1.80, and shareholders may have the chance to dispose its shares for a total of 47% capital gains after 2 and a half years.

Share price movement post announcement of the deal when the stock begins trading may present further opportunities for risk arbitrage.

Final thoughts:

Pros: Opportunity for unlocking share value for shareholders, higher offer price

Cons: Failure to obtain requisite valid acceptances pass conditions precedent.

Note: This is not an investment advice. Buy and sell any securities at your own risk.

Disclosure: None.

KAF Seagroatt-Campbell: Risk Arbitrage or reverse risk arbitrage? (2)

Recall earlier posting that there is a potential risk arbitrage gains about 7.5% should you purchase KAF shares on 22 February 2016. The offer has officially become unconditional and the offeror had proceeded to scoop up the remaining shares in KAF. KAF IB will have full control of KAF Seagroatt-Campbell. This deal will be finalized by June 2016 and will close a chapter on the takeover deal. The price has shot up to RM2.69 per share and those holding on to the shares can sell them back at RM2.70 for some savings on brokerage expenses. No further opportunities are expected from this share.

Note: This is not an investment advice. Buy and sell any securities at your own risk.