(Its a jaw dropping offer)
Having talked about the company in my previous posts,i will not go deep into the analysis again.
But this offer of 22.5 cents is a minority shareholder unfriendly offer.
Unfortunately, this offer will most likely go through.
1) The undertaking stands at 86.88% which means that only 3.12% is needed for the 90% hurdle for the take over to go through
2) If anyone has seen the top 20 shareholders, one will realise that Goh Seok Kee has 3.26% of the shares. If he/she has not disposed them (which is unlikely given the volume traded for the stock since 17 march has never been in millions), then the takeover offer will likely go through if he/she agrees to it.
When your name is just one word away from the executive chairman...its hard for others without any information to believe you are not affiliated.......
Why is the offer a lowball?
1) Company has 19 million cash and 9 million of liabilities, so the company has roughly 6 cents per share of spare cash. This offer kinda values the company at 16.5 cents when the company's continuing operations made 1.56 cents is a multiple of 11 is not really a good offer of a company which has good cash flows and the offer is just barely at its net value.
2) The company has not booked the profits that it will make from the compulsory land acquisition
This is expected to book another 3.9 cents per share of profits and increase the cash position of the company even further. This just further justifies that the cash used in dynamic holdings can be used for the purchase of the company itself.
Closing Words
Sometimes life is as such, the offer is definitely bad for OPMI investors and the fact that the shareholding structure is as such has made it very easy for the take-over offer to happen. I am curious to see what the appointed independent financial advisor has to say........
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