Hi all,
This is Phillip here.
First let me set the stage.
https://www.theedgemarkets.com/article/setting-right-precedent-takeover-withdrawals
Now,
What happens if someone shows you the money, and tells you that they are going to buy your business from you? You will write an agreement, submit documents, get stamping and do the deed. However, once the documents are signed, at no point in time are you allowed to suddenly cancel the agreement on a whim.
This is what TA tried to do on its privatisation deal in May, which I believed had put a damper on its VGO activities.
The deal is such:
In a move to take TA Global private, TAE had proposed to buy the remaining 39.83% stake it does not own in the property firm via two options, including a cash offer of 28 sen per share held.
The second option was a share swap based on an exchange ratio of 0.4211 new share in TAE to be issued at 66.5 sen each for every TA Global share surrendered.
Now, this is admittedly a very bad deal for the original IPO holders who had bought shares at RM0.50 each. They are now being forced to take a haircut in receiving a cash offer of 28 sen or to swap shares in TAE at 66.5 sen, even though the current price of TA enterprise is now valued at RM0.52.
Unfortunately this is neither here nor there.
Let me put it out right now, I do not trust the management capability of TAE nor their business model.
However,
I do believe in Arbitrage, and barring any sort of Renong put option problems where Halim can just say I'm sorry, I do believe that this VGO is solid.
At the current price right now of 23 cents, I do believe there is a HIGH (but not guaranteed) possibility that our dear TAE is going to be forced to purchase the balance of shares at 28 cents, due to the ill effects of Covid-19 and the lack of good prospects for the future of TAGB in this environment. More importantly, if someone is trying to finagle their way out of paying money, they are sure to believe that TAGB is worth less than 28 cents.
With TAE's VTO withdrawal application rejected, the group's non-interested shareholders will get to decide whether to vote for or against TAE’s proposal at an extraordinary general meeting.
However, this still remains to be voted for or against TAE proposal at the next EGM.
I do believe that this is an extraordinary sequence of events, and that the rest of the 24.49% of minority shareholders will take whatever bad deal they can get out of the market conditions and go for resolution. as this amounts to around 304m of float, taking a 50% haircut is better than looking at a bad prospect in the future. I do feel sorry for the shareholders who trusted in ta global to lead them out of this, but the secondary option to strengthen the company by merging with TAE could also provide some form of survivability out of Covid19, as the market economics
As usual,
I hope you learn something new today. FYI, as you can see from my portfolio listed, I have a small ownership in TAGB bought recently.
