Based on details on HH's takeover offer for Superbowl last night, this is what I gather:
NTA of SB now:
Assets listed in the report last night (Treasure at Balmoral, ZP, Beverly, shops): $1.46 per share
Other assets not listed(investments and plant n prop, assume no change since June13) : 5ct per share
Liabilities: -11ct
Net NTA of SB: $1.40
The takeover price of 75ct is therefore quite a big discount to the NTA of $1.40.
Moreover, the valuation of the shops is probably based on rental yields (ie, assuming the props are kept for rental income), which could be lower than the selling prices if the units are put up in the open market. I am also assuming zero value for SB's bowling biz.
The good thing, however, is that HH is the one taking over SB (better than the family's private holding co), so one can still buy HH shares to benefit from this cheap deal.
HH will be a much bigger company after the exercise. In fact, in yesterday’s announcement, the co says that HH’s NTA will surge to $1.98 if they manage to acquire 100% of SB.
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 ......
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