Date: April 27, 2016
Minority shareholders of GMG Global have raised concerns with SIAS regarding the pre-condition offer by Halcyon Agri Corporation.
SIAS called for a meeting with the Independent Directors, and today met with Mr Ong Kian Ming and Mr Tay Puan Siong of GMG Global, where SIAS highlighted the concerns of the minority shareholders and posed the following questions:
1. In the GMG 2015 Annual Report, it is stated that the GMG Group has 78,000 hectares of rubber plantations and has annual processing capacity of 527,000 tons. The GMG Group’s Net Asset Value (NAV) per share as at 31 December 2015 was 93.42 Singapore cents. In Halcyon’s financial results announcement dated 26 February 2016, it is stated that Halcyon has NAV per share as at 31 December 2015 of 29.84 Singapore cents. The NAV of GMG Group is more than 3 times the NAV of Halcyon.
2. As stated in the GMG 2015 Annual Report, GMG has Net Tangible Assets (computed as NAV less goodwill and intangible assets) (“NTA”) of S$709m or NTA per share of 92.6 Singapore cents. In Halcyon’s financial results announcement dated 26 February 2016, Halcyon has negative NTA of S$139m or negative NTA per share of 23.1 Singapore cents. Despite GMG Group’s positive NTA of 92.6 Singapore cents per share and Halcyon’s negative NTA of 23.1 Singapore cents per share, the Halcyon offer values GMG at S$0.70 per share while Halcyon is valued at S$0.75 per share.
3. Halcyon is acquiring certain assets from Sinochem International (Overseas) Pte Ltd, which is GMG’s controlling shareholder for $210 million, which is 1.6 times the net assets amount of $132m. There is no visibility on how the consideration of $132m was determined. In contrast, GMG is valued at $0.70 per share or about 0.74 times net asset value.
4. Does the Board not think GMG is relatively under-valued in this instance?
5. Does the Board not think the offer to GMG shareholders is unfair?
The independent directors of GMG Global informed SIAS at today’s meeting that the current offer is a proposal only and the board would be appointing an IFA . Nevertheless, the deal would require regulatory approval. Further, the 48% minority shareholders of GMG Global will have the opportunity to vote on the proposal in due course. SIAS urged the GMG Global Board to address the concerns of the minority shareholders at tomorrow’s AGM. SIAS recommends shareholders to wait for the IFA report before making any decision regarding their shares.
Founder, President & CEO
Securities Investors Association (Singapore)