2nd Chance Properties

[weijian]

hi ghchua,
Thanks for correcting my ignorance. I have corrected the post.

[ghchua]

The offer price for each Offer Share (the “Offer Price”) will be as follows:
For each Offer Share: S$0.30 in cash.
The Offer Price is final and the Offeror does not intend to increase the Offer Price.

https://links.sgx.com/1.0.0/corporate-an...3f06236544

[lkw175]

The offer price for each Offer Share (the “Offer Price”) will be as follows:
For each Offer Share: S$0.30 in cash.
The Offer Price is final and the Offeror does not intend to increase the Offer Price.

https://links.sgx.com/1.0.0/corporate-an...3f06236544

.......for and on behalf 
             of 
FINAL CHANCE HOLDINGS PTE. LTD.

what an interesting name 

not vested

[weijian]

Is it time for a SECOND look at ANOTHER CHANCE?

Under its FY23 commentary section, it has stated the below:
We expect dividend income to decrease as we need to adhere to SGX Listing rule 1020 and downsize our existing investment portfolio.

- To recap, the company's investment portfolio has ballooned from 80mil (FY20 end) to 270mil (FY23 end). This ~190mil increase is funded by ~100-110mil from properties sales, 60mil from borrowings, ~10mil from existing cash hoard and remaining are probably portfolio gains.

- So what is SGX Listing rule 1020?
Where an issuer, which had originally qualified for a listing of its equity securities under Chapter 2, intends to set up an investment fund or undertake any business(es) in investment fund management, which in aggregate, exceeds 50% of the issuer's net asset value, the issuer must demonstrate to the Exchange that it satisfies the listing requirements for investment funds stipulated in Chapter 4 before it takes any steps to undertake such a business, whether through a transaction or a series of transactions.
https://rulebook.sgx.com/rulebook/1020

- With >90% of its NTA in investments, it seems that the company is now an "investment fund". Chapter4 has a couple of rules for investment funds but I wonder which exact criteria is it failing to adhere to?

- That said, Out of its balance sheet (FY23) --> Investments (FVOCI/FVPL) ~95%, investment properties/PPE ~30% and inventory (retail gold shops) ~5%, is balanced out by ~30% of gearing to achieve 100%. Most of the current loans were taken form FY21 onwards to take advantage of "cheap equity prices". So for a start, the wind-down of its investment portfolio will involve a reduction/elimination of gearing (especially with interest rates rising). If SECOND CHANCE has to wind down its portfolio to <50% of NTA, that will mean excess cash on its balance sheet even after fully paying down its loans. Is there a GOOD CHANCE that the ex-presidential hopeful CEO will reward him/family members/OPMIs with something special? After all, Chairman Salleh has always proven to give a FAIR CHANCE to minorities.

Second Chance Properties FY23 results:
https://links.sgx.com/FileOpen/SCPL%20-%...eID=776281

SGX listing rule chapter 4:
https://rulebook.sgx.com/rulebook/404

From AGM2023 QnA, Second Chance may be soon be recognizing mark to market losses from its property portfolio in coming 1H24 based on its AGM QnA below:

Unlike CP which is a freehold property, SLQ is a leasehold property with 58 years remaining. Despite offering a 20% discount below present valuations for SLQ over the last few months, we were unable to sell any unit.

Second Chance now finds itself caught between a rock and hard place - It has to divest its securities portfolio (abeit over a period of 4 years after they got a waiver from SGX). From the proceeds, it should be levering down 1st, since most of the borrowings were first incurred to scale up the securities portfolio to current size. Then on the other hand, Chairman has rightly determined that most of its strata titled commercial units are better off sold than holding them. Even after repaying its loans, it probably still has substantial cash on the BS. Paying out the cash will mean that NAV drops and risk breaking the listing rule again. It probably has to start finding new businesses/assets to invest in again.

OR will it be better to delist? After all, they are reaching the limits of doing their scrip dividend-warrant thing. Chairman and his related family members collectively own ~86% of the company now.

AGM2023 QnA:
https://links.sgx.com/FileOpen/SCPL%20-%...eID=780780

Now that our ex-Presidential hopeful knows he has NO CHANCE to be elected as President, he has decided to take A CHANCE to follow his buddy George into delisting their company.

A quick review of the BS shows NAV=30cents and largely comprises of listed equities (FVOCI) and investment properties (FV). So NAV is probably quite reflective of the true value. Matter of fact, if we were to consider liquidation costs, then there is a slight premium. Based on how market price jumped post announcement, Mr Market believes there is LITTLE CHANCE of it not going through.

Is this the LAST CHANCE for OPMIs to say "selamat tinggal"?

[ghchua]

Hi weijian,

The company have almost paid down all their debts taken to scale up their securities portfolio. Given that they could not further increase it and have to sell it down further to comply with listing rules, the next best thing to do is to delist the company in order to continue with their securities business, without any restrictions from listing rules.

I guess this might be the best chance for minorities to exit as well, given that the offer price is around NAV.