Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
Back on the 8 April, <a href="https://www.smartkarma.com/entities/metlifecare-ltd" target="_blank" data-smartkarma-citation="entities:19219:1" rel="noopener">Metlifecare Ltd (MET NZ)</a>  <a href="http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/351464/320564.pdf" target="_blank" rel="noopener">announced</a> it had received notice of an intention to terminate its SIA with APVG/EQT.
APVG/EQT argued that COVID-19 would "reasonably likely to reduce the consolidated underlying net profit (as described in the MAC clause) of Metlifecare by at least 10% in FY20", triggering the MAC.
Metlifecare responded that it was seeking legal advice on the termination, and asserted the MAC trigger was without substance.
Further NZX announcements have been released by Metlifecare as it lawyered up, with a High Court date set (<a href="https://www.nzx.com/announcements/352813" target="_blank" rel="noopener">28 May</a>) for considering its application for initial orders to call a meeting of shareholders to vote on the scheme plan contemplated by the SIA.
Justice Graham Lang (presiding) may allow the dispatch of Scheme documents and the meeting to go ahead. It is possible for EQT to appeal but an appeal is not an automatic stay – that is, the Scheme process can continue throughout an appeal process until a judge issues a stop order.
Currently trading 9% below its undisturbed price (20 Nov 2019), but 24% up from its 8 April low, when I last wrote on the company (<a href="https://skr.ma/R6uin" target="_blank" rel="noopener">Metlifecare's Options As EQT Walks</a>), recommending a buy. There would be ~61% upside to the NZ$7/share Offer price.
I think MET has a strong chance the Scheme Meeting goes ahead.  That would not guarantee the deal goes through, but I would be long here. 
As always, more thoughts below the line.
</div>
<div>

</div>


Back on the 8 April, Metlifecare Ltd (MET NZ)  announced it had received notice of an intention to terminate its SIA with APVG/EQT.
APVG/EQT argued that COVID-19 would "reasonably likely to reduce the consolidated underlying net profit (as described in the MAC clause) of Metlifecare by at least 10% in FY20", triggering the MAC.
Metlifecare responded that it was seeking legal advice on the termination, and asserted the MAC trigger was without substance.
Further NZX announcements have been released by Metlifecare as it lawyered up, with a High Court date set (28 May) for considering its application for initial orders to call a meeting of shareholders to vote on the scheme plan contemplated by the SIA.
Justice Graham Lang (presiding) may allow the dispatch of Scheme documents and the meeting to go ahead. It is possible for EQT to appeal but an appeal is not an automatic stay – that is, the Scheme process can continue throughout an appeal process until a judge issues a stop order.
Currently trading 9% below its undisturbed price (20 Nov 2019), but 24% up from its 8 April low, when I last wrote on the company (Metlifecare's Options As EQT Walks), recommending a buy. There would be ~61% upside to the NZ$7/share Offer price.
I think MET has a strong chance the Scheme Meeting goes ahead.  That would not guarantee the deal goes through, but I would be long here. 
As always, more thoughts below the line.





Holdcos behaving badly is unusual, but it happens, as it is happening now, for one reason or another.
Firm Offers behaving badly, outside the realms of opportunistic/takeunder situations, are rare under normal circumstances.
Clearly we are not living under normal circumstances.
<a href="https://www.smartkarma.com/entities/augusta-capital-ltd" target="_blank" data-smartkarma-citation="entities:9901:1" rel="noopener">Augusta Capital (AUG NZ)</a> is the latest in a string of firm offers to <a href="http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AUG/350727/319702.pdf" target="_blank" rel="noopener">lapse</a> with the Bidco (<a href="https://www.smartkarma.com/entities/centuria-capital-group" target="_blank" data-smartkarma-citation="entities:15546:1" rel="noopener">Centuria Capital (CNI AU)</a> walking after invoking its right to a material adverse change (MAC) being triggered under their respective agreement (the scheme implementation agreement here).
<a href="https://www.smartkarma.com/entities/bumrungrad-hospital-pub-co" target="_blank" data-smartkarma-citation="entities:883:1" rel="noopener">Bumrungrad Hospital Pub Co (BH TB)</a> declined 11.67% (it also went ex-div today) on news <a href="https://www.smartkarma.com/entities/bangkok-dusit-med-service" target="_blank" data-smartkarma-citation="entities:875:1" rel="noopener">Bangkok Dusit Med Service (BDMS TB)</a> have delayed their AGM to evaluate the impact of COVID-19 and consider and evaluate whether it is still appropriate to make the offer for BH TB.
<a href="https://www.smartkarma.com/entities/abano-healthcare-group-ltd" target="_blank" data-smartkarma-citation="entities:14023:1" rel="noopener">Abano Healthcare (ABA NZ)</a> has warned Corvid-19 may trigger a MAC.
<a href="https://www.smartkarma.com/entities/australian-unity-office-fund" target="_blank" data-smartkarma-citation="entities:24077:1" rel="noopener">Australian Unity Office Fund (AOF AU)</a>'s Offer has lapsed, ostensibly to a technical breach of its SIA, but probably virus-related. <a href="https://www.smartkarma.com/entities/metlifecare-ltd" target="_blank" data-smartkarma-citation="entities:19219:1" rel="noopener">Metlifecare Ltd (MET NZ)</a> is all but broken, despite repeated announcements assuring the Offer is (sort of) still on.
As always, more below the fold.

 
<a href="http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/AUG/350727/319702.pdf" target="_blank" rel="noopener"></a>

Holdcos behaving badly is unusual, but it happens, as it is happening now, for one reason or another.
Firm Offers behaving badly, outside the realms of opportunistic/takeunder situations, are rare under normal circumstances.
Clearly we are not living under normal circumstances.
Augusta Capital (AUG NZ) is the latest in a string of firm offers to lapse with the Bidco (Centuria Capital (CNI AU) walking after invoking its right to a material adverse change (MAC) being triggered under their respective agreement (the scheme implementation agreement here).
Bumrungrad Hospital Pub Co (BH TB) declined 11.67% (it also went ex-div today) on news Bangkok Dusit Med Service (BDMS TB) have delayed their AGM to evaluate the impact of COVID-19 and consider and evaluate whether it is still appropriate to make the offer for BH TB.
Abano Healthcare (ABA NZ) has warned Corvid-19 may trigger a MAC.
Australian Unity Office Fund (AOF AU)'s Offer has lapsed, ostensibly to a technical breach of its SIA, but probably virus-related. Metlifecare Ltd (MET NZ) is all but broken, despite repeated announcements assuring the Offer is (sort of) still on.
As always, more below the fold.

 


New Zealand

Abano Healthcare Group Ltd is an active investor in and operator of healthcare and medical services businesses. The Company is a multi-disciplinary group with services in Audiology, Dental, Diagnostics and Rehabilitation.

Abano Healthcare (ABA NZ)

Metlifecare: Down But Not Out - Get Long

Back on the 8 April, Metlifecare Ltd (MET NZ) announced it had received notice of an intention to terminate its SIA with APVG/EQT. APVG/EQT...

David Blennerhassett

Takeover Defenses, MACs & Deal Breaks

Holdcos behaving badly is unusual, but it happens, as it is happening now, for one reason or another. Firm Offers behaving badly, outside the...

David Blennerhassett