Keppel Limited

[grubb]

Every time a new offer comes out I learn something new about the Companies Act. It turns out that in this case, the minimum threshold for Keppel Corp before they can exercise compulsory acquisition is >95%. See below for the extract from page 12 of the offer letter:

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For the avoidance of doubt, the Offeror will extend the Higher Offer Price to all Shareholders, including those Shareholders who, at the date on which the Compulsory Acquisition Threshold is reached, have already accepted the Offer. For purely illustrative purposes only, based on a total number of:

(i) 1,545,288,730 issued Shares (excluding treasury shares) as at the Latest Practicable Date, in order for the Compulsory Acquisition Threshold to be reached, the Offeror must acquire or agree to acquire (whether pursuant to valid acceptances of the Offer or otherwise) an additional 40.9 per cent. of the total number of issued Shares, which when aggregated with the number of Shares owned, controlled or agreed to be acquired by the Offeror as at the date of the Offer, represents 95.5 per cent. of the total number of issued Shares; and

(ii) 1,625,703,507 issued Shares (excluding treasury shares), being the maximum potential issued share capital of the Company , in order for the Compulsory Acquisition Threshold to be reached, the Offeror must acquire or agree to acquire (whether pursuant to valid acceptances of the Offer or otherwise) an additional 43.3 per cent. of the maximum potential issued share capital of the Company, which when aggregated with the number of Shares owned, controlled or agreed to be acquired by the Offeror as at the date of the Offer, represents 95.2 per cent. of the maximum potential issued share capital of the Company.

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And the reason is because of a difference in company act 215(1) and 215(3). I went to read the company act but I still dont understand the difference. From page 21 of the offer letter:

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Dissenting Shareholders have the right under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer, such number of Shares which, together with the Shares held by the Offeror, its related
corporations or their respective nominees, comprise 90 per cent. or more of the total number of issued Shares as at the final Closing Date of the Offer. Dissenting Shareholders who wish to exercise such right are advised to seek their own independent legal advice. [u]Unlike Section 215(1) of the Companies Act, the 90 per cent. threshold under Section 215(3) of the Companies Act does not exclude Shares held by the Offeror, its related corporations or their respective nominees.[/u]
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However, if the freefloat drops below 10%, the company will be suspended. I think Boon meant suspended not delisted right?

Also Zaobao yesterday mentioned that the level of acceptances will only be announced daily after it has crossed 72%.

Taking all the information into account, I believe that delisting is likely to fail.

(1) The minimum threshold is higher than the 90% that I thought.
(2) Because Kepcorp has stated that it will not revise the offer, and because the offer is structured in such a funny way, I believe rational shareholders will rather sell on the market than tender their shares. New shareholders who bought on the market will not be so silly to tender $4.38 and lose money. They will rather wait for other people to tender to be sure they can get $4.60.
(3) The despatch date was 12 Feb. It is already halfway through the tender period but 72% is still not crossed yet. The closing date is on 12 March 2015. I believe that an extension will be likely.

If the price drops upon failure, it may be a good chance to acquire Keppel Land shares and wait for the next offer 1 year later. I believe there is a 12 month moratorium on a new offer if the current offer fails, just like Pertama.

Did I get anything wrong? What does everyone think?

"Also Zaobao yesterday mentioned that the level of acceptances will only be announced daily after it has crossed 72%. "

Is this true?
Can any VB here verify this?
I thought they wont announce the level of acceptances until after the closing date (12th march)

Here you go. I took a picture of the relevant article. I think I'll go read the companies act and takeover code properly this week