Arun George

IPOs and Catalysts/Events

Global Equity Research Ltd

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aag-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:501:1" rel="noopener">Aag Energy Holdings (2686 HK)</a> scheme document is out with the court meeting scheduled for 27 April. The IFA considers the HK$1.85 offer to be fair and reasonable.</li>
<li>The IFA’s conclusion is dubious as the contents of the report could easily have come to the opposite conclusion. The quick despatch of the scheme document is worrying. </li>
<li>The weak IFA report will further annoy minorities and push more towards the NO camp. The vote is on a knife edge which is reflected in the current 13.5% spread. </li>
</ul>

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>That was a quick turnaround. Two days after the pre-conditions were satisfied, the Scheme Document for <a href="https://www.smartkarma.com/entities/xinjiang-xintai-natural-gas-a" target="_blank" data-smartkarma-citation="entities:27036:1" rel="noopener">Xinjiang Xintai (603393 CH)</a>'s privatisation of <a href="https://www.smartkarma.com/entities/aag-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:501:1" rel="noopener">AAG Energy (2686 HK)</a> has been dispatched.</li>
<li>The EGM and Court Meeting will take place on the 27 April, with payment, assuming all resolutions get up, on (or before) the 1 June.</li>
<li>The Independent Financial Adviser, Somerley, considers the terms of the Scheme "fair and reasonable." However, their analysis clearly shows this is not the case. </li>
</ul>

<ul>
<li>Back on the 17 February, <a href="https://www.smartkarma.com/entities/aag-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:501:1" rel="noopener">AAG Energy Holdings (2686 HK)</a> announced an underwhelming Offer of HK$1.85/share (declared final) by way of a Scheme from major shareholder <a href="https://www.smartkarma.com/entities/xinjiang-xintai-natural-gas-a" target="_blank" data-smartkarma-citation="entities:27036:1" rel="noopener">Xinjiang Xintai (603393 CH)</a>.</li>
<li>Yesterday, Xinjiang Xintai shareholders approved the proposal. This was expected - it's a total bargain. </li>
<li>AAG shareholders will likely get to vote on the Scheme in early May. They should vote it down.</li>
</ul>

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aag-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:501:1" rel="noopener">Aag Energy Holdings (2686 HK)</a> noted that the pre-condition for <a href="https://www.smartkarma.com/entities/xinjiang-xintai-natural-gas-a" target="_blank" data-smartkarma-citation="entities:27036:1" rel="noopener">Xinjiang Xintai Natural Gas (603393 CH)</a> privatisation offer at HK$1.85 per share has been satisfied (which was expected). </li>
<li>The gross spread has widened to 16.4% due to concerns that the recent solid FY22 results, lack of dividends and the skinny premium would nudge minorities to vote NO.</li>
<li>It remains unclear if the dissatisfied retail minorities have enough votes to block the scheme. The downside remains low as the shares are trading 5% below the undisturbed price. </li>
</ul>

<ul>
<li>We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.</li>
<li>Highest spreads - <a href="https://www.smartkarma.com/entities/alliance-aviation-services-ltd" target="_blank" data-smartkarma-citation="entities:20401:1" rel="noopener">Alliance Aviation Services (AQZ AU)</a>, <a href="https://www.smartkarma.com/entities/111-inc" target="_blank" data-smartkarma-citation="entities:27412:1" rel="noopener">111 Inc (YI US)</a>, <a href="https://www.smartkarma.com/entities/genesis-minerals-ltd" target="_blank" data-smartkarma-citation="entities:4650:1" rel="noopener">Genesis Minerals (GMD AU)</a>, <a href="https://www.smartkarma.com/entities/aag-energy-holdings-ltd" target="_blank" data-smartkarma-citation="entities:501:1" rel="noopener">Aag Energy Holdings (2686 HK)</a>, <a href="https://www.smartkarma.com/entities/tyro-payments-ltd" target="_blank" data-smartkarma-citation="entities:28393:1" rel="noopener">Tyro Payments (TYR AU)</a>, <a href="https://www.smartkarma.com/entities/estia-health-ltd" target="_blank" data-smartkarma-citation="entities:77:1" rel="noopener">Estia Health (EHE AU)</a>. </li>
<li>Lowest spreads - <a href="https://www.smartkarma.com/entities/mincor-resources-nl" target="_blank" data-smartkarma-citation="entities:6731:1" rel="noopener">Mincor Resources NL (MCR AU)</a>, <a href="https://www.smartkarma.com/entities/healius-ltd-6d4d947d-ad32-4aea-b2d8-265f5768b55e" target="_blank" data-smartkarma-citation="entities:14208:1" rel="noopener">Healius (HLS AU)</a>, <a href="https://www.smartkarma.com/entities/united-fiber-system-ltd" target="_blank" data-smartkarma-citation="entities:20826:1" rel="noopener">Golden Energy &amp; Resources (GER SP)</a>, <a href="https://www.smartkarma.com/entities/boustead-projects-ltd" target="_blank" data-smartkarma-citation="entities:26785:1" rel="noopener">Boustead Projects (BOCJ SP)</a>, <a href="https://www.smartkarma.com/entities/gk-goh-holdings-ltd" target="_blank" data-smartkarma-citation="entities:8482:1" rel="noopener">GK Goh Holdings (GKG SP)</a>, Nippon Steel. </li>
</ul>

Hong Kong

AAG Energy Holdings Limited is  an energy exploration and development company. The Company engages in coalbed methane exploration and development.

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Aag Energy Holdings - 2686 HK

AAG Energy (2686 HK): Rushed Scheme Document Points to a Vote on a Knife Edge

The quick despatch of the scheme document suggests that the offeror is worried. The vote is on a knife edge. While the deal-break downside is...

Arun George

AAG Energy (2686 HK): Scheme Doc Out. IFA Says Fair. It Is Not

The Offer is low-balled. Currently trading 5% below the undisturbed price. AAG is cheap. Quite possibly shares are being artificially pushed down...

David Blennerhassett

AAG Energy (2686 HK): Pre-Cons Done. Still A Rubbish Offer

I would vote down this Scheme. I would, however, still buy here given the low Offer premium and limited downside. Currently trading at HK$1.62...

David Blennerhassett

AAG Energy (2686 HK): Pre-Condition Satisfied as Doubts Sets In

There is an overhang of dissatisfied retail minorities. However, the widening spread and the volatile markets could nudge minorities towards the...

Arun George

Merger Arb Mondays (27 Mar) - AAG Energy, Jiangnan, Toshiba, Toyo, Estia, Mincor, Golden Energy

This week, the highest gross spreads are Alliance Aviation (36.9%), 111 (31.9%), Genesis (23.8%), AAG Energy (15.6%), Tyro (13.1%), Estia (12.4%),...

Arun George

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