Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>After the sanctioning of <a href="https://www.smartkarma.com/entities/allied-properties-h-k-limited" target="_blank" data-smartkarma-citation="entities:19953:1" rel="noopener">Allied Properties (H.K.) (56 HK)</a>'s (<em><a href="https://skr.ma/vN7NF" target="_blank" rel="noopener">APH) Scheme (Allied Prop (56 HK): Scheme Done. AGL Next?</a></em>) was <em>thrice</em> delayed by the High Court and further updates from the company shed no light on the issues faced, what was inconceivably feared became apparent last Friday night when the Court <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1005/2020100502577.pdf" target="_blank" rel="noopener">declined to sanction</a> the Scheme.</p>
<p>This afternoon, the High Court<a href="https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=131280&amp;currpage=T" target="_blank" rel="noopener"> judgment</a> appeared on the Hong Kong Judiciary website. </p>
<p>It is ultimately a frustrating read, one in which some of the Offeror's (<a href="https://www.smartkarma.com/entities/allied-group-ltd" target="_blank" data-smartkarma-citation="entities:4387:1" rel="noopener">Allied (373 HK)</a>) preparatory work was sloppy or poorly prepared.</p>
<p>But the great double-take in this ruling is a large portion of the judgment devoted to the headcount test at the Scheme vote.</p>
<p>APH is incorporated in Hong Kong. S674(c) of the <a href="https://www.hklii.hk/eng/hk/legis/ord/622/s674.html" target="_blank" rel="noopener">Hong Kong Ordinance</a> says “subject to subsection 2(a)…”.  Subsection 2(a) replaced the headcount rule with the 10%-of-float veto. The headcount test was abolished in 2012 after a decision was reached on a <a href="https://www.legco.gov.hk/yr10-11/english/bc/bc03/papers/bc030530cb1-2019-2-e.pdf" target="_blank" rel="noopener">Companies Bill</a>.</p>
<p>It is not clear why Allied's counsel did not raise this abolishment; but instead, butchered an attempt to show a majority in number had occurred, and as a result of this off-piste analysis, negatively influenced the court on sanctioning the Scheme.</p>
<p>I expect Allied to appeal. I do not expect shares to resume trading during an appeal. </p>
<p>Unfortunately for shareholders who approved the Scheme, payment under the offer appears some way off.</p>

After the sanctioning of Allied Properties (H.K.) (56 HK)'s (APH) Scheme (Allied Prop (56 HK): Scheme Done. AGL Next?) was thrice delayed by the High Court and further updates from the company shed no light on the issues faced, what was inconceivably feared became apparent last Friday night when the Court declined to sanction the Scheme.
This afternoon, the High Court judgment appeared on the Hong Kong Judiciary website. 
It is ultimately a frustrating read, one in which some of the Offeror's (Allied (373 HK)) preparatory work was sloppy or poorly prepared.
But the great double-take in this ruling is a large portion of the judgment devoted to the headcount test at the Scheme vote.
APH is incorporated in Hong Kong. S674(c) of the Hong Kong Ordinance says “subject to subsection 2(a)…”.  Subsection 2(a) replaced the headcount rule with the 10%-of-float veto. The headcount test was abolished in 2012 after a decision was reached on a Companies Bill.
It is not clear why Allied's counsel did not raise this abolishment; but instead, butchered an attempt to show a majority in number had occurred, and as a result of this off-piste analysis, negatively influenced the court on sanctioning the Scheme.
I expect Allied to appeal. I do not expect shares to resume trading during an appeal. 
Unfortunately for shareholders who approved the Scheme, payment under the offer appears some way off.

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<p>After shares were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0929/2020092900089.pdf" target="_blank" rel="noopener">halted</a> before trading opened on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers,  <a href="https://www.smartkarma.com/entities/cimc-tianda-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15431:1" rel="noopener">CIMC-TianDa Holdings (445 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1004/2020100400027.pdf" target="_blank" rel="noopener">announced</a> on the 4 October an Offer by way of a Scheme primarily from <a href="https://www.smartkarma.com/entities/china-international-marine-cntnrs-gp-ltd" target="_blank" data-smartkarma-citation="entities:11752:1" rel="noopener">China International Marine Cntnrs Gp (2039 HK)</a> (CIMC). </p>
<p>The cancellation price is HK$0.266/share, a 20.66% premium to last close. The price is final.</p>
<p>CIMC, together with joint offeror concert parties hold 75.53% of CIMC-Tianda, following the conversion of a CB held by <a href="https://www.smartkarma.com/entities/wison-engineering-services-co" target="_blank" data-smartkarma-citation="entities:24534:1" rel="noopener">Wison Engineering Services Co (2236 HK)</a>. Therefore Scheme Shareholders will comprise 24.47% of shares out.</p>
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<p>Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against, or 2.447% of shares out. The headcount applies as CIMC-Tianda is Cayman incorporated.</p>
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<p>Despite solid 1H20 earnings, the announcement indicates those earnings were propped up by orders from last year, and it has proven challenging to procure a stable supply of raw materials and to complete new orders. Given this uncertain backdrop - one expected when exposed to the global aviation industry -  pricing appears <em>okay</em>.</p>
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<p>As always, more below the fold.</p>
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After shares were halted before trading opened on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers,  CIMC-TianDa Holdings (445 HK) announced on the 4 October an Offer by way of a Scheme primarily from China International Marine Cntnrs Gp (2039 HK) (CIMC). 
The cancellation price is HK$0.266/share, a 20.66% premium to last close. The price is final.
CIMC, together with joint offeror concert parties hold 75.53% of CIMC-Tianda, following the conversion of a CB held by Wison Engineering Services Co (2236 HK). Therefore Scheme Shareholders will comprise 24.47% of shares out.


Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against, or 2.447% of shares out. The headcount applies as CIMC-Tianda is Cayman incorporated.


Despite solid 1H20 earnings, the announcement indicates those earnings were propped up by orders from last year, and it has proven challenging to procure a stable supply of raw materials and to complete new orders. Given this uncertain backdrop - one expected when exposed to the global aviation industry -  pricing appears okay.


As always, more below the fold.


CIMC-Tianda (445 HK): Scheme Offer Lead By CIMC

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<p>After shares were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0929/2020092900255.pdf" target="_blank" rel="noopener">halted</a> after trading closed on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers, <a href="https://www.smartkarma.com/entities/hengxing-gold-holding-co-ltd" target="_blank" data-smartkarma-citation="entities:8874:1" rel="noopener">Hengxing Gold Holding (2303 HK)</a> (HGH) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0930/2020093001586.pdf" target="_blank" rel="noopener">announced</a> on the 30 September a pre-conditional Scheme from <a href="https://www.smartkarma.com/entities/shandong-gold-mining-co-ltd-61153493-5437-47ee-a8d3-aec41fb7f1da" target="_blank" data-smartkarma-citation="entities:27455:1" rel="noopener">Shandong Gold Mining Co., Ltd. (1787 HK)</a> ("SGM").</p>
<p>Under the terms of the Scheme, SGM is offering 0.17241 SGM shares (5/29) for every HGH share. A special dividend of HK$0.3585/HGH was declared on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0929/2020092900669.pdf" target="_blank" rel="noopener">29 September</a>, for which the record date will be 16 October 2020. The scrip terms will not be adjusted for the special dividend. The offer, inclusive of the dividend represents a discount to last close of 2.2%. Terms will not be increased. </p>
<p>The pre-conditions concern approvals from the NDRC and the Ministry of Commerce of the PRC or the Department of Commerce of Shandong Provincial Government, for outbound direct investment.</p>
<p>Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against. The headcount test applies as HGH is Cayman incorporated.</p>
<p>SGM has received irrevocable of 75% of shares out from Ke Xiping (60%) and his son Ke Jiaqi (15%).  No HGH shareholders are required to abstain. The vote appears a formality.</p>
<p>This deal is effectively done. The only question mark is over the timing of the PRC regulatory approvals.</p>
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<p>As always, more below the fold.</p>
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After shares were halted after trading closed on the 29 September pursuant to the Hong Kong Code on Takeovers and Mergers, Hengxing Gold Holding (2303 HK) (HGH) announced on the 30 September a pre-conditional Scheme from Shandong Gold Mining Co., Ltd. (1787 HK) ("SGM").
Under the terms of the Scheme, SGM is offering 0.17241 SGM shares (5/29) for every HGH share. A special dividend of HK$0.3585/HGH was declared on the 29 September, for which the record date will be 16 October 2020. The scrip terms will not be adjusted for the special dividend. The offer, inclusive of the dividend represents a discount to last close of 2.2%. Terms will not be increased. 
The pre-conditions concern approvals from the NDRC and the Ministry of Commerce of the PRC or the Department of Commerce of Shandong Provincial Government, for outbound direct investment.
Conditions to the Scheme are standard - at a Court Meeting, at least 75% of Independent Shares vote FOR the Scheme &amp; not more than 10% of ALL Independent Shares against. The headcount test applies as HGH is Cayman incorporated.
SGM has received irrevocable of 75% of shares out from Ke Xiping (60%) and his son Ke Jiaqi (15%).  No HGH shareholders are required to abstain. The vote appears a formality.
This deal is effectively done. The only question mark is over the timing of the PRC regulatory approvals.


As always, more below the fold.


Hengxing (2303 HK): Offer From Shandong Gold

Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

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<p>Back on the 20 April, <a href="https://www.smartkarma.com/entities/allied-group-ltd" target="_blank" data-smartkarma-citation="entities:4387:1" rel="noopener">Allied Group Limited (373 HK)</a> (AGL) made an <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0420/2020042001582.pdf" target="_blank" rel="noopener">Offer</a> for 75%-held <a href="https://www.smartkarma.com/entities/allied-properties-hk-ltd" target="_blank" data-smartkarma-citation="entities:19953:1" rel="noopener">Allied Properties Hk (56 HK)</a> (APH), by way of a Scheme, at $1.92/share (cash), a 34.2% premium to last close. The Offer consideration was Final, and would be split between a $0.42/share Scheme Consideration and a $1.50 Scheme Dividend.  The Scheme Doc was despatched on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0618/2020061800579.pdf" target="_blank" rel="noopener">19 June</a>. The Court Meeting was held on the 15 July and the resolutions to approve the Scheme was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0715/2020071500859.pdf" target="_blank" rel="noopener">approved</a>. Shares continue to trade until the 14 August (inclusive). Cheques were <em>supposed</em> to be despatched on or before the 8 Sept.</p>
<p>Then something went awry. </p>
<p>The sanctioning of the Scheme has now thrice been delayed by the High Court. At the last session on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0907/2020090700916.pdf" target="_blank" rel="noopener">7 September</a>, submissions from APL were made to the Court "<em>whether the Scheme was approved by a majority in a number of APL Shareholders present and voting in person or by proxy at the Court Meeting</em>".</p>
<p>Huh? The headcount test doesn't apply to Hong Kong-incorporated companies like APH.</p>
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<p>As always, more below the fold.</p>
<p><em>(Shares are currently suspended, so there is no trade here. Look away now if this is not your thing - it will save you time).</em></p>
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Back on the 20 April, Allied Group Limited (373 HK) (AGL) made an Offer for 75%-held Allied Properties Hk (56 HK) (APH), by way of a Scheme, at $1.92/share (cash), a 34.2% premium to last close. The Offer consideration was Final, and would be split between a $0.42/share Scheme Consideration and a $1.50 Scheme Dividend.  The Scheme Doc was despatched on the 19 June. The Court Meeting was held on the 15 July and the resolutions to approve the Scheme was approved. Shares continue to trade until the 14 August (inclusive). Cheques were supposed to be despatched on or before the 8 Sept.
Then something went awry. 
The sanctioning of the Scheme has now thrice been delayed by the High Court. At the last session on the 7 September, submissions from APL were made to the Court "whether the Scheme was approved by a majority in a number of APL Shareholders present and voting in person or by proxy at the Court Meeting".
Huh? The headcount test doesn't apply to Hong Kong-incorporated companies like APH.


As always, more below the fold.
(Shares are currently suspended, so there is no trade here. Look away now if this is not your thing - it will save you time).


Allied Props (56 HK). Stalled At The Finish

Hong Kong

Allied Properties (H.K.) Limited, through its subsidiaries, provides investment, brokerage, and financing services.  The Company also develops and invests in property, provides property management, and operates hotels.

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Allied Properties (H.K.) (56 HK)

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Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

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Allied Props (56 HK). Stalled At The Finish

Back on the 20 April, Allied Group Limited (373 HK) (AGL) made an Offer for 75%-held Allied Properties Hk (56 HK) (APH), by way of a Scheme, at...

David Blennerhassett

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