At lunch time, Jaya Holdings stock was down a massive 9 cents to 57 cents. The following posting was made by Kevin Scully, executive chairman of NRA Capital, on his blog before the market opened this morning. Visit www.nracapital.com


350_kevin_aice
Kevin Scully is a sought-after speaker on stock investments. File photo by Leong Chan Teik

Jaya Holdings - Cathay Asset Management (a subsidary of Deutche Bank) buys controlling block and triggers General Offer at S$0.48.

The Jaya Holdings shareholder saga continues.  Over the weekend Cathay Asset Management announced that it had purchased the 54.7% stake in Jaya Holdings from NOS) Nautical Offshore Services and each of Mr.Cosimo Borrelli and Mr. Jason Kardachi of Borelli Walsh Pte Limited (in their capacity as joint and several receivers) for S$202.6mn or about S$0.48 per share.

This triggered a mandatory unconditional cash offer for the remaining shares at the same price. Please see the Offer document.

There has been talk of this block being for sale since the middle of 2010 but the asking price was always higher.  The main difficulty had always been that any buyer would have to make a general offer for the rest.

Fundamentally, I think Cathay Asset have got a good deal for themselves at S$0.48.  I still believe that Jaya is worth about S$1.00 - the offer is also significantly below its NAV and does not take into account the value of its 21 vessels which I believe has a market value surplus of more than S$100mn.

Let's wait for the Jaya IFA to give an opinion on the offer - i wont be surprised that the comment will be that its too cheap and that shareholders should not accept.  I am of the view that this mandatory general offer is procedural.  What is more important is the intention of the acquirer.  If he wants to take the company private then a much higher offer needs to be made for other shareholders to accept.  I would wait for this.....(if it happens).

I dont know much about the acquirer - there are five or six parties involved (see page 2-3 of the Offer document.  Many of them seem to be financial investors......

I am inclined that investors HOLD on to their Jaya shares which are fundamentally undervalued and await developments from the new investor/investors.


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