Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

Persol Lobs Takeover Proposal for Programmed

A glimmer of hope after a challenging year

Event-Driven

Programmed Skilled Workforce / Event-Driven

Programmed Maintenance Services (PRG AU) made a bid for Skilled Group (SKE AU) in late&nbsp;December 2014 touting scale and synergies. Their cash+scrip offer was worth A$1.45/SKE share at the time and was in January rejected by SKE as too low (the main problem), and opportunistic, after SKE shares had fallen some 60-odd percent for the year, 30% more than PRG. The SKE board also said there wasn't much industrial logic to such a deal despite PRG touting up to post-tax synergies of $15mm/year&nbsp;(worth A$150mm in market cap at 10x according to PRG's letter to SKE).&nbsp;Rumors surfaced in May 2015 that the two parties were back at the negotiating table and this was confirmed by the companies on May 25.&nbsp;On June 24th 2015, PRG came back with a slightly higher bid, lifting terms from .5032 shares of PRG + 25cts cash to .55 shares of PRG + 25cts cash, an increase of 9.3% in terms of share count making the new offer worth A$1.79/ share of SKE.&nbsp;Just over half the difference between the old bid and the new bid was due to PRG's shares having risen 9.3% since the old bid. The other half was an increase in the number of PRG shares offered.&nbsp;Programmed boss Chris Sutherland will lead the post-merger organisation, with Skilled chief Angus McKay leaving the group. SKE's board seems to have seen&nbsp;Upon the new bid,&nbsp;SKE's Board unanimously recommended the offer&nbsp;(doc&nbsp;<a href="http://www.asx.com.au/asxpdf/20150624/pdf/42zcn5mf3gnljy.pdf" target="_blank">here</a>).&nbsp;Yesterday, the <a href="http://www.skilled.com.au/media/189659/150321-Explanatory-Memorandum-Scheme-Meeting-289p.pdf" target="_blank">Scheme Doc</a>&nbsp;was released after the First Court date ordered a Scheme Meeting for Sep25, with the Independent Expert (Grant Samuels)&nbsp;saying the deal was fair (if at the low end of the valuation range) and that "Skilled shareholders will be better off if the scheme proceeds" (and threatening a possible fall below the pre-deal&nbsp;levels $1.20-1.30). &nbsp;Given the fall in oil and other commodities, and the likely ongoing weakness in the offshore oil &amp; gas and onshore mining sectors where Skilled gets a significant portion of revenue historically (57% last year), I would tend to agree.&nbsp;More below the fold...

Programmed Maintenance Services (PRG AU) made a bid for Skilled Group (SKE AU) in late&nbsp;December 2014 touting scale and synergies. Their cash+scrip offer was worth A$1.45/SKE share at the time and was in January rejected by SKE as too low (the main problem), and opportunistic, after SKE shares had fallen some 60-odd percent for the year, 30% more than PRG. The SKE board also said there wasn't much industrial logic to such a deal despite PRG touting up to post-tax synergies of $15mm/year&nbsp;(worth A$150mm in market cap at 10x according to PRG's letter to SKE).&nbsp;Rumors surfaced in May 2015 that the two parties were back at the negotiating table and this was confirmed by the companies on May 25.&nbsp;On June 24th 2015, PRG came back with a slightly higher bid, lifting terms from .5032 shares of PRG + 25cts cash to .55 shares of PRG + 25cts cash, an increase of 9.3% in terms of share count making the new offer worth A$1.79/ share of SKE.&nbsp;Just over half the difference between the old bid and the new bid was due to PRG's shares having risen 9.3% since the old bid. The other half was an increase in the number of PRG shares offered.&nbsp;Programmed boss Chris Sutherland will lead the post-merger organisation, with Skilled chief Angus McKay leaving the group. SKE's board seems to have seen&nbsp;Upon the new bid,&nbsp;SKE's Board unanimously recommended the offer&nbsp;(doc&nbsp;here).&nbsp;Yesterday, the Scheme Doc&nbsp;was released after the First Court date ordered a Scheme Meeting for Sep25, with the Independent Expert (Grant Samuels)&nbsp;saying the deal was fair (if at the low end of the valuation range) and that "Skilled shareholders will be better off if the scheme proceeds" (and threatening a possible fall below the pre-deal&nbsp;levels $1.20-1.30). &nbsp;Given the fall in oil and other commodities, and the likely ongoing weakness in the offshore oil &amp; gas and onshore mining sectors where Skilled gets a significant portion of revenue historically (57% last year), I would tend to agree.&nbsp;More below the fold...

Skilled | PRG - Scheme Doc Out Last Friday, Franking Eligibility Ends Soonish