Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>On the 17 January, property developer <a href="https://www.smartkarma.com/entities/hkc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14707:1" rel="noopener">HKC Holdings (190 HK)</a>  <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0117/2021011700005.pdf" target="_blank" rel="noopener">announced</a> a privatisation offer by way of a Scheme from the controlling Oei family. The offer price of $8/share was a 120.39% premium to last close and around an eight-year high. An interim dividend of HK$0.13/share was also declared and would NOT be deducted from the cancellation price. </p>
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<p>The Scheme Document was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0331/2021033101856.pdf" target="_blank" rel="noopener">despatched</a> on the 31 March. The IFA said "fair &amp; reasonable". At the Scheme Meeting on the 23 April, disinterested shareholders overwhelmingly approved (99.36%) the Scheme. Done &amp; dusted.</p>
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<p><strong><em>But wait .....</em></strong></p>
<p>In the HKEx <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0423/2021042302469.pdf" target="_blank" rel="noopener">announcement</a> detailing the results of the Meeting, HKC also states:</p>
<blockquote>
<p>The directions Order of the Bermuda Court dated 25 March 2021 provided that the presence, in person or by proxy, of the holders of a majority of voting power in respect of the shares issued and entitled to vote at the Court Meeting shall constitute a quorum for the conduct of business at the Court Meeting (‘‘Quorum Requirement’’). Given the number of Disinterested Scheme Shareholders who voted in person or by proxy at the Court Meeting may not comply with the Quorum Requirement, the Company has asked its Bermuda legal advisers to forthwith seek directions from the Court with respect to the convention and the validity of the results of the Court Meeting.</p>
</blockquote>
<p>There is no mention of a quorum condition to the Scheme in the Scheme Document. </p>
<p>HKC was supposed to trade yesterday, but shares were suspended ahead of the open.</p>
<p>Is this new information a deal-breaker?</p>


On the 17 January, property developer HKC Holdings (190 HK)  announced a privatisation offer by way of a Scheme from the controlling Oei family. The offer price of $8/share was a 120.39% premium to last close and around an eight-year high. An interim dividend of HK$0.13/share was also declared and would NOT be deducted from the cancellation price. 


The Scheme Document was despatched on the 31 March. The IFA said "fair &amp; reasonable". At the Scheme Meeting on the 23 April, disinterested shareholders overwhelmingly approved (99.36%) the Scheme. Done &amp; dusted.

But wait .....
In the HKEx announcement detailing the results of the Meeting, HKC also states:

The directions Order of the Bermuda Court dated 25 March 2021 provided that the presence, in person or by proxy, of the holders of a majority of voting power in respect of the shares issued and entitled to vote at the Court Meeting shall constitute a quorum for the conduct of business at the Court Meeting (‘‘Quorum Requirement’’). Given the number of Disinterested Scheme Shareholders who voted in person or by proxy at the Court Meeting may not comply with the Quorum Requirement, the Company has asked its Bermuda legal advisers to forthwith seek directions from the Court with respect to the convention and the validity of the results of the Court Meeting.

There is no mention of a quorum condition to the Scheme in the Scheme Document. 
HKC was supposed to trade yesterday, but shares were suspended ahead of the open.
Is this new information a deal-breaker?

<p>When both <a href="https://www.smartkarma.com/entities/china-renewable-energy-inves" target="_blank" data-smartkarma-citation="entities:14033:1" rel="noopener">China Renewable Energy Investment (987 HK)</a> and <a href="https://www.smartkarma.com/entities/hkc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14707:1" rel="noopener">Hkc Holdings (190 HK)</a> were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0113/2021011300128.pdf" target="_blank" rel="noopener">suspended</a> last week <em>pursuant to the Hong Kong Code on Takeovers and Mergers</em>, my expectation in <em><a href="https://skr.ma/DRfv2" target="_blank" rel="noopener">China Renewable Energy (987 HK): Possible Privatisation Offer</a></em>, was that HKC would privatize 56%-held China Renewables.  Not to be.</p>
<p>Last night,(mainly) PRC property developer HKC <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0117/2021011700005.pdf" target="_blank" rel="noopener">announced</a> a privatisation offer by way of a Scheme from the controlling Oei family. The offer price of $8/share is a 120.39% premium to last close and around an eight-year high. The Offer price will not be increased.</p>
<p>An interim dividend of HK$0.13/share has been declared and will NOT be deducted from the cancellation price. </p>
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<p>Key Scheme conditions include at least 75% of Disinterested Shares voting FOR &amp; not more than 10% of the votes attached to ALL the Disinterested Shares against.</p>
<p>Disinterested Scheme shares total 117.16mn or 22.93% of shares out, therefore the blocking stake at the court meeting will be 2.293%. No single shareholder has such a stake.</p>
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<p>The headcount test applies as HKC is Bermuda incorporated. </p>
<p>This looks done.</p>
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<p>As always, more below the fold. </p>

When both China Renewable Energy Investment (987 HK) and Hkc Holdings (190 HK) were suspended last week pursuant to the Hong Kong Code on Takeovers and Mergers, my expectation in China Renewable Energy (987 HK): Possible Privatisation Offer, was that HKC would privatize 56%-held China Renewables.  Not to be.
Last night,(mainly) PRC property developer HKC announced a privatisation offer by way of a Scheme from the controlling Oei family. The offer price of $8/share is a 120.39% premium to last close and around an eight-year high. The Offer price will not be increased.
An interim dividend of HK$0.13/share has been declared and will NOT be deducted from the cancellation price. 

Key Scheme conditions include at least 75% of Disinterested Shares voting FOR &amp; not more than 10% of the votes attached to ALL the Disinterested Shares against.
Disinterested Scheme shares total 117.16mn or 22.93% of shares out, therefore the blocking stake at the court meeting will be 2.293%. No single shareholder has such a stake.


The headcount test applies as HKC is Bermuda incorporated. 
This looks done.

As always, more below the fold. 

HKC (190 HK): Take-Private Offer By Way Of A Scheme

China Renewable Energy Investment / Event-Driven

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<p><a href="https://www.smartkarma.com/entities/china-renewable-energy-inves" target="_blank" data-smartkarma-citation="entities:14033:1" rel="noopener">China Renewable Energy Investment (987 HK)</a> is a micro-cap clean energy play in China.</p>
<p>Last April, 55.66% of issued shares moved within CCASS, from HSBC into BEA. This is <a href="https://www.smartkarma.com/entities/hkc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14707:1" rel="noopener">Hkc Holdings (190 HK)</a>'s stake.</p>
<p>The movement may simply have been an administrative matter. But given the flurry of M&amp;A activity in the PRC renewable energy space, it was worth speculating on the matter.</p>
<p>Both <a href="https://www.smartkarma.com/entities/china-renewable-energy-inves" target="_blank" data-smartkarma-citation="entities:14033:1" rel="noopener">China Renewable Energy Investment (987 HK)</a> and <a href="https://www.smartkarma.com/entities/hkc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14707:1" rel="noopener">Hkc Holdings (190 HK)</a> are now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0113/2021011300128.pdf" target="_blank" rel="noopener">suspended</a> pursuant to the Hong Kong Code on Takeovers and Mergers.</p>
<p>Should an Offer be tabled, this would be the fifth Hong Kong-listed, clean-energy company subject to a privatisation or change of control in the last two years - and seventh in which interested parties have been circling.</p>
<p>As always, more below the fold.</p>
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<p></p>
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China Renewable Energy Investment (987 HK) is a micro-cap clean energy play in China.
Last April, 55.66% of issued shares moved within CCASS, from HSBC into BEA. This is Hkc Holdings (190 HK)'s stake.
The movement may simply have been an administrative matter. But given the flurry of M&amp;A activity in the PRC renewable energy space, it was worth speculating on the matter.
Both China Renewable Energy Investment (987 HK) and Hkc Holdings (190 HK) are now suspended pursuant to the Hong Kong Code on Takeovers and Mergers.
Should an Offer be tabled, this would be the fifth Hong Kong-listed, clean-energy company subject to a privatisation or change of control in the last two years - and seventh in which interested parties have been circling.
As always, more below the fold.





China Renewable Energy (987 HK): Possible Privatisation Offer

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<p>Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods. </p><p>In the past 7 days, the top 3 companies that repurchased the most shares from the market were <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> (HKD 188.8 million worth of buybacks), <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> (1810 HK) (HKD 75.0 million worth of buybacks), <a href="https://www.smartkarma.com/entities/hkc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14707:1" rel="noopener">Hkc Holdings (190 HK)</a> (HKD 12.8 million worth of buybacks). There are 34 companies that repurchased shares in the market. These repurchases amounted to HKD 342.1 million.</p><p>In the past 30 days, the top 3 companies that repurchased the most shares from the market were <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> (HKD 636.2 million worth of buybacks), Country Garden Holdings Company Limited (2007 HK) (HKD 354.5 million worth of buybacks), Tenfu (6868 HK) (HKD 179.8 million worth of buybacks).</p><p>In the past 90 days, the top 3 companies that repurchased the most shares from the market were Tencent Holdings Limited (700 HK) (HKD 636.2 million worth of buybacks), Country Garden Holdings Company Limited (2007 HK) (HKD 354.5 million worth of buybacks), Xiaomi-W (1810 HK) (HKD 324.5 million worth of buybacks).</p><p>In the past 365 days, the top 3 companies that repurchased the most shares from the market were Xiaomi-W (1810 HK) (HKD 1,274.9 million worth of buybacks), Tencent Holdings Limited (700 HK) (HKD 1,220.3 million worth of buybacks), Hengan International Group Company Limited (1044 HK) (HKD 904.4 million worth of buybacks).</p>

Hong Kong Exchange publishes share repurchases by listed companies on a daily basis. In our weekly note, we will provide statistics on top repurchases over one week, one month, one quarter and one year periods. In the past 7 days, the top 3 companies that repurchased the most shares from the market were Tencent Holdings (700 HK) (HKD 188.8 million worth of buybacks), Xiaomi Corp (1810 HK) (1810 HK) (HKD 75.0 million worth of buybacks), Hkc Holdings (190 HK) (HKD 12.8 million worth of buybacks). There are 34 companies that repurchased shares in the market. These repurchases amounted to HKD 342.1 million.In the past 30 days, the top 3 companies that repurchased the most shares from the market were Tencent Holdings (700 HK) (HKD 636.2 million worth of buybacks), Country Garden Holdings Company Limited (2007 HK) (HKD 354.5 million worth of buybacks), Tenfu (6868 HK) (HKD 179.8 million worth of buybacks).In the past 90 days, the top 3 companies that repurchased the most shares from the market were Tencent Holdings Limited (700 HK) (HKD 636.2 million worth of buybacks), Country Garden Holdings Company Limited (2007 HK) (HKD 354.5 million worth of buybacks), Xiaomi-W (1810 HK) (HKD 324.5 million worth of buybacks).In the past 365 days, the top 3 companies that repurchased the most shares from the market were Xiaomi-W (1810 HK) (HKD 1,274.9 million worth of buybacks), Tencent Holdings Limited (700 HK) (HKD 1,220.3 million worth of buybacks), Hengan International Group Company Limited (1044 HK) (HKD 904.4 million worth of buybacks).

Hong Kong Buyback Weekly: Xiaomi Buyback Returns (2019-09-20)

Asia Ex-J Consumer/ Transport analyst

Valerie Law, CFA

Thematic (Sector/Industry)

<p>Extending my point about more demanding transportation frameworks going forward (see <a href="https://www.smartkarma.com/insights/comfortdelgro-fy16-results-an-era-where-competition-hits-a-higher-gear" target="_blank" data-smartkarma-citation="insights:8719">ComfortDelGro FY16 Results: An Era Where Competition Hits a Higher Gear</a> ), the recent fire-bomb attack on Hong Kong’s MTR that left 19 injured signals increasing costs for transport operators. This article presents another reason why investors should sell MTR Corp, on top of points already provided by fellow insight provider Sameer Taneja in an earlier piece <a href="https://www.smartkarma.com/insights/mtr-66-hk-conviction-sell-thesis" target="_blank" data-smartkarma-citation="insights:7982">MTR (66 HK): Conviction Sell Thesis</a></p><h2><strong>Security Costs to</strong></h2>…

Extending my point about more demanding transportation frameworks going forward (see ComfortDelGro FY16 Results: An Era Where Competition Hits a Higher Gear ), the recent fire-bomb attack on Hong Kong’s MTR that left 19 injured signals increasing costs for transport operators. This article presents another reason why investors should sell MTR Corp, on top of points already provided by fellow insight provider Sameer Taneja in an earlier piece MTR (66 HK): Conviction Sell ThesisSecurity Costs to…

66 HK and SBUS SP: Attack on HK Metro Signals Increases in Transport Operators' Costs

Hong Kong

HKC (Holdings) Limited and its subsidiaries are principally engaged in the business of property development and investment, alternative energy investment and management, infrastructure and construction.

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HKC Holdings (190 HK)