In today’s briefing:
- Origin: Brookfield’s “Inferior” Alternative Proposal
- Origin Energy (ORG AU): Brookfield/EIG’s Latest Effort Falls Flat
- Understanding & Assessing Yearend Dividend Arbitrage Structure Using Futures in Korea
- OreCorp (ORR AU): Silvercorp Returns with a Higher Offer
- EIA and OPEC Watch: Depending on Nigeria and Iran
Origin: Brookfield’s “Inferior” Alternative Proposal
- Origin Energy (ORG AU)‘s Scheme vote today was always going to be a tenuous affair with AusSuper’s ~17.5% blocking stake, and Perpetual also firmly in the “against” camp.
- The Scheme meeting has now been adjourned. Origin said that based on the proxy votes, it was unlikely the Scheme would have achieved the required 75% approval by shareholders.
- In addition, the Brookfield-led consortium has pitched a alternative non-binding and indicative proposal which Origin views as inferior to the existing Scheme, and has significant reservations as to its complexity.
Origin Energy (ORG AU): Brookfield/EIG’s Latest Effort Falls Flat
- Origin Energy (ORG AU) has postponed its scheme meeting to 4 December after it received a non-binding indicative proposal from Brookfield/EIG to amend the current scheme.
- The Board admitted the current scheme was likely to be voted down if the meeting was held today. The alternative transaction structure will struggle to gain shareholder support.
- If Brookfield/EIG walks, the share price will fall, at least in the short term. We think a reasonable deal break price is A$7.40, an 11% downside to the last close.
Understanding & Assessing Yearend Dividend Arbitrage Structure Using Futures in Korea
- As the ex-dividend date in Korea has been before the dividend is determined, SSFs trade at a discount based on the anticipated dividend rather than adjusting dividend settlement proceeds explicitly.
- The current dividend arbitrage yield for the financial companies can be seen as reflecting the postponement of the ex-dividend date to the next year.
- We should pay attention to those with a significant dividend arbitrage yield but that did not amend their articles of incorporation earlier this year.
OreCorp (ORR AU): Silvercorp Returns with a Higher Offer
- Orecorp Ltd (ORR AU) has disclosed a revised offer from Silvercorp Metals (SVM US) at A$0.19 cash per share and 0.0967 SVM shares per ORR share.
- The revised offer was necessitated due to the decline in SVM shares. Since 7 August, the revised offer is, on average, 7.8% higher than the previous offer.
- Directors and irrevocables represent around 20% of voting rights. The revised offer should help the scheme get up. At the last close, the gross spread was 8.6%.
EIA and OPEC Watch: Depending on Nigeria and Iran
- Welcome to our weekly EIA watch paired with a few remarks on the postponed OPEC meeting.
- We have had a look at OPEC production and export numbers, and it seems like production is much more price bullish than actual net exports (meaning a draw on local OPEC inventories)
- Interestingly, the US, Nigeria, Iran, UAE (among others) have managed to fill a lot of the production gap left open by left open by Saudi Arabia.
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