It has been almost 3 months since my last post. Apologies for the missing in action over these 3 months! I was slighltly pre-occupied with pre-merger preparations with my real-life princess. Nevertheless, this should not be used as excuse for my infrequent blog posts. But it doesnt mean I have stopped the quest to search for new princesses to rescue. Another reason for the MIA is that there are fewer deeply valuable companies around for us to uncover so I really need to expand to other markets to search harder.
This post is to update that Nobel Design has received a mandatory unconditional cash offer of S$0.51 per share (S$0.5048 after netting off proposed dividends) from Grand Slam RF18 Investments Pte Ltd (Grand Slam). This is the link to the full offeror's announcement. Grand Slam is an investment holding company which has the following shareholding interests. Looks like these shareholders are great Tennis fans! Jokes aside, we have to be wary of investing in other companies which they are management (luckily there are not many around) because they are placing their best interests at heart instead of the shareholders' interests..
In my previous post on Nobel Design (ND), the company was holding net cash of SG$115.59 mil ($0.54 per share) and in the latest Q1 financials as at 31 March 2017, the net cash level has increased to SGD121.9 mil ($0.56 per share) and the Shareholders' Equity is SG$161.9mil ($0.74 per share).
What is it showing here??? The management has the cheeks to offer a buy-out price at below the net cash level!!! This seems to be outright daylight robbery, trying to rob the other shareholders of their share of $$$ in the company!
Sadly and unfortunately, this management buyout did not manage to unlock the full value of ND, not even close to the NAV level. At $0.51 price level, the Price to book is at 0.69... By offering a cash offer lower than the net cash level, I really wonder what signals the management are trying to send out. Are you saying that your $0.51 per share is more worthwhile than the net cash deposits of $0.56 in the company? Grand Slam still claims that there is compelling premium over the prevailing market prices and this is an unique cash exit opportunity for shareholders (I guess they are referring to their unique opportunity to cash out).
I have to agree that this counter has very low liquidity and the bid-ask spread is about S$0.05 to S$0.08. I had been queueing at $0.40 for the past months and hence, I was not allocated to any so I am totally not vested.. I would be very interested to see what the Independent Financial Advisor has to say for this offer price. But I urge all shareholders to consider this offer seriously and REJECT THE OFFER if you think that the offer should at least match the net cash level (even though personally, I think the intrinsic value should be higher than the net cash level).
Anyway, one of the majority shareholders who is also the former CEO, Bert Choong has sold his 50,482,000 shares of ND (23.0%) to Grand Slam. Grand Slam is holding 64.3% of the shares in ND so they need to garner about 25.7% more shares to allow their ploy to go through (i.e. delist the company and exercise its right to compulsorily acquire the remaining 10% shares). The twenty largest shareholders make up about 90% of the shareholdings although there are few nominees in the list. Hence, it will be a tough fight for minority shareholders but it is definitely worthwhile to put up a fight and you can probably turn to SIAS to request their help to fight for more fairness in this transaction.
In Conclusion, this is an unfair offer price in my opinion and the management should reconsider to increase the offer price to be fairer to other shareholders. If the company is to be liquidated today, it is almost certain that the liquidation value will fetch more than S$0.51. Minority shareholders, put up a strong fight and show the management that you are no pushovers!!!
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.I wrote this article myself, and it expresses my own opinions. I am not receiving compensation in return. I have no business relationship with any company whose stock is mentioned in this article.
THE V.I.K
Thanks for highlighting this. There is another company which recently offered 1 cent above its cash value with total disregard of its NAV.
ReplyDeleteHi! No problem on that! Nobel design is a company with little or no analyst coverage so I hope my post can allow the shareholders to make a more informed decision.
DeleteWhich company is that? At least they are offering a price above the net cash position.