Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>On the 23 June, the Cheng family made an underwhelming voluntary conditional Offer of $1.88/share for <a href="https://www.smartkarma.com/entities/giordano-international-ltd" target="_blank" data-smartkarma-citation="entities:13899:1" rel="noopener">Giordano International (709 HK)</a>. </li>
<li>The Offer is conditional on the family getting to more than 50% via tendering, and the Cheng's (and concert parties) control 24.57%.  </li>
<li>The Composite Document is now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0815/2022081500070.pdf" target="_blank" rel="noopener">out</a> with a first close on the 5 September.  The Offer Price has now been declared final. That's a surprise.</li>
</ul>


On the 23 June, the Cheng family made an underwhelming voluntary conditional Offer of $1.88/share for Giordano International (709 HK). 
The Offer is conditional on the family getting to more than 50% via tendering, and the Cheng's (and concert parties) control 24.57%.  
The Composite Document is now out with a first close on the 5 September.  The Offer Price has now been declared final. That's a surprise.


Giordano (709 HK): Offer Doc Out. Terms Declared Final

<ul>
<li>The Companies (Amendment) Act 2021 of the Cayman Islands (Amendment Act), which will come into force on 31 August 2022, will abolish the current 'headcount test'.</li>
<li>Those companies incorporated in the Cayman Islands, and subject to a members' Scheme of Arrangement, were previously required to satisfy the headcount test under section 86 of the Companies Act.</li>
<li>This development clarifies previous uncertainty/ambiguity which could arise, with 'take private' deals of Cayman-incorporated, Hong Kong-listed companies, where a Scheme is the favoured privatisation path.</li>
</ul>


The Companies (Amendment) Act 2021 of the Cayman Islands (Amendment Act), which will come into force on 31 August 2022, will abolish the current 'headcount test'.
Those companies incorporated in the Cayman Islands, and subject to a members' Scheme of Arrangement, were previously required to satisfy the headcount test under section 86 of the Companies Act.
This development clarifies previous uncertainty/ambiguity which could arise, with 'take private' deals of Cayman-incorporated, Hong Kong-listed companies, where a Scheme is the favoured privatisation path.


Cayman Islands: Headcount To Be Decapitated On 31 August

<ul>
<li>
<a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a>'s Scheme was comfortably <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0426/2022042601954.pdf" target="_blank" rel="noopener">voted through</a> by shareholders.  </li>
<li>The overarching risk to the transaction, that it may fail the headcount test, largely turned out to be a storm in a tea cup. </li>
<li>Tomorrow is the last day of trading with payment under the Scheme on or before the 20 May. Index sell flows come at the close. </li>
</ul>



Razer Inc (1337 HK)'s Scheme was comfortably voted through by shareholders.  
The overarching risk to the transaction, that it may fail the headcount test, largely turned out to be a storm in a tea cup. 
Tomorrow is the last day of trading with payment under the Scheme on or before the 20 May. Index sell flows come at the close. 


IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>The amended Cayman Islands Act is yet to become law which increases the odds that the headcount test remains for <a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a>'s court meeting on 26 April. </li>
<li>Since the despatch of the scheme document, the gross spread has narrowed to 7.6% (last close). Current deal probability implies an 80% chance of success.</li>
<li>The rising deal probability negatively skews the risk/reward profile. We are hesitant to be long this trade into a scheme meeting that is too close to call.</li>
</ul>


The amended Cayman Islands Act is yet to become law which increases the odds that the headcount test remains for Razer Inc (1337 HK)'s court meeting on 26 April. 
Since the despatch of the scheme document, the gross spread has narrowed to 7.6% (last close). Current deal probability implies an 80% chance of success.
The rising deal probability negatively skews the risk/reward profile. We are hesitant to be long this trade into a scheme meeting that is too close to call.


Razer’s Offer Risk/Reward Ahead of the 26 April Scheme Meeting

<ul>
<li>The Cayman Islands is seeking to eliminate the "headcount test" for Schemes of Arrangement.</li>
<li>Such an amendment will provide greater certainty for Hong Kong Schemes, wherein 59% of all listed companies are Cayman Islands incorporated. </li>
<li>This development arrives a tad late for <a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a>, which is trading wide to terms, exactly on account of the fact it could potentially fail the headcount test. </li>
</ul>


The Cayman Islands is seeking to eliminate the "headcount test" for Schemes of Arrangement.
Such an amendment will provide greater certainty for Hong Kong Schemes, wherein 59% of all listed companies are Cayman Islands incorporated. 
This development arrives a tad late for Razer Inc (1337 HK), which is trading wide to terms, exactly on account of the fact it could potentially fail the headcount test. 


Hong Kong

Chinese Estates Holdings Limited, through its subsidiaries, invests in and develops real estate properties.  The Company also invests in securities and provides brokerage and money lending services.

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Chinese Estates Holdings (127 HK)

Giordano (709 HK): Offer Doc Out. Terms Declared Final

The downside is probably limited here. I'd expect shares to trade down today given the terms have been declared final. If you buy here or lower,...

David Blennerhassett

Cayman Islands: Headcount To Be Decapitated On 31 August

On 31 August 2022, the Cayman Islands will abolish the current 'headcount test' which a Cayman Islands members' Scheme (including HK companies) had...

David Blennerhassett

Razer Inc (1337 HK): Storm In A Tea Cup

This will trade tight tomorrow, potentially even edging above terms, depending on short interest. Play the spread if you can get in a few percent...

David Blennerhassett

Razer’s Offer Risk/Reward Ahead of the 26 April Scheme Meeting

The amended Cayman Islands Act is yet to become law increasing the odds that the headcount test remains. We are hesitant to be long this trade into...

Arun George

Caymans To Decapitate The Headcount

This is a positive development. Avoiding another Glorious Property fiasco - or even the more dodgy share splitting seen in the PCCW Ltd (8 HK)...

David Blennerhassett

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