• Maybe Yes, because there was no announcement that the Indonesians made any open market purchase for last Friday. Tonight, we will know if there&rsquo re any,  for yesterday (Monday).
• Maybe No, because unlike Hong Fok, Indonesians just need less than 4% to delist Top Global, it is easy meat. Why will they not privatize?

MONEY

Investor Central: Top Global Limited ― Why did controlling shareholder?s son sell 300m shares just days before today?s EGM?

Oct 14 ― Top Global Ltd' s independent shareholders will gather at Regent Hotel today to vote on the contentious acquisition of a 71.52 per cent stake in Indonesia Stock Exchange listed PT Suryamas Dutamakmur Tbk for S$153 million (RM392 million) from Top Global' s controlling shareholder Sukmawati Widjaja. Mdm Widjaja (who belongs to the family which controls the Sinar Mas Group in Indonesia) owns a 54.12 per cent stake in Top Global, as per the circular on September 29.

Top Global has proposed to allot 19 billion new shares to Mdm Widjaja to pay for the stake.

As a result, she would own an 82.76 per cent stake in Top Global after the acquisition.

But a group of shareholders who say they hold 250 million shares have told Investor Central they will vote against the transaction because the 19 billion new shares will be offered at a 31 per cent discount to their net asset value, while the purchase price of S$153 million will be more than double the S$64.7 million they are worth.


When the acquisition was first announced last December the sale consideration included 5 million options in Top Global ― a requirement which was dropped in a supplement to the circular on September 4.

The acquisition will not trigger an obligation for Top Global to make a tender offer for the public shareholders of Suryamas Group as the acquisition doesn' t lead to a change in control of Suryamas Group.

Simply put, the transaction leads to transfer of Mdm Widjaja' s controlling stake in Suryama Group to another company controlled by her.

At the prevailing stock price of 8 Singapore cents, Top Global' s market capitalisation would increase to about S$240 million after the acquisition.

Evidently, the proposed interested party transaction is beneficial for the controlling shareholder of Top Global Ltd, while the independent public shareholders will see their stake in the company will be reduced to 17.24 per cent from 45.92 per cent now.

Investor Central. We keep your investments honest.

1. Why did Sukmawati Widjaja' s son sell 300 million shares just days before the EGM?

According to an announcement on October 7, Hano Maeloa ― an executive director cum CEO of Top Global ― sold 300 million shares for to an undisclosed buyer for 0.7 cents per share in an off-market transaction on October 2.

As a result, his stake in the company dropped to 0.53 per cent from 3.15 per cent earlier.

Hano Maeloa is the son of Oei Siu Hoa @ Sukmawati Widjaja.

After the sale, Mdm Widjaja' s total stake in Top Global has dropped to 51.46 per cent from 54.08 per cent previously.

The timing of the transaction is important because it was executed just three days after the circular for the EGM was despatched to Top Global' s shareholders, and just 12 days before the scheduled EGM.

Top Global is buying a 71.52 per cent stake in Suryamas Group from Mdm Widjaja for S$153.7 million (including costs).

Apparently, it is an interested party transaction.

Consequently, Mdm Widjaja and her associates will have to abstain from voting at the EGM today.

But now that Hano Maeloa has sold a 2.62 per cent stake just days before the EGM, one wonders if this is just an arrangement to enable the controlling shareholder to vote at the EGM, which they can' t do otherwise.

Moreover, on page 57 of the September 29 circular, the company said that Mdm Widjaja and Hano Maeloa have guaranteed not to sell any shares for a period of 6 months from the date of completion of the acquisition.

Technically, Hano Maeloa can sell his shares before the acquisition is completed.

But the bigger question is: is it appropriate for him to sell shares just 3 days after agreeing to a moratorium in the circular on the independent shareholders September 29?

In response to our queries a spokesman said the company would be happy to address all shareholders? questions at the EGM.

2. Why are the parts of the circular, where the independent and reporting auditor almost qualified its opinion, illegible?

According to the circular (page 2), Nexia TS Public Accounting Corporation is the Independent and Reporting Auditor of Top Global.

For the purpose of the circular, Nexia TS converted the financials of Suryamas Group to IFRS in order to prepare its report on examination of the unaudited pro forma consolidated financial statements of Top Global after the acquisition (refer page 95 of the circular).

But the report of Nexia TS (appended on page 439 onwards) is hardly legible in the circular.

More importantly, the audit opinion on page 440 draws attention towards some adjustment relating to the bargain purchase.

But due to a very bad print of the report, we are unable to read any further.

And that continues for the entire report appended from page 440 to page 612 of the circular.

The company spokesman said the document was compressed during conversion to PDF, and a hard copy would be made available to shareholders at the EGM.

3. Is the purchase price of Suryamas Group justified?

Suryamas Group is listed on Indonesia Stock Exchange.

As per the latest trading price of Suryamas Group, a 71.52 per cent stake is worth about S$50 million.

That' s just about a third of the S$153.7 million Top Global is paying for the stake.

On page 15 of the circular, Top Global said the independent valuer estimated the fair value of a 71.52 per cent stake in Suryamas Group at about S$306 million.

Asia Valuation & Advisory Services Pte Ltd is the independent valuer hired by Top Global Ltd.

In estimating the fair value of Suryamas Group, the independent valuer assumd that the market price of the company doesn?t reflect its true value.

Therefore, the valuer used the median price-to-net-asset-value and price-to-total-assets ratios of a few other companies to arrive at the fair value (page 21 of the circular).

Also, the valuer worked with a local property valuer, IHOT, Dollar & Raymond, to arrive at the market value of the real estate assets and property, plant and equipment of Suryamas Group in Indonesia.

To estimate the market value of the real estate assets of Suryamas Group, the property valuer used the " highest and best use" method.

On page 22, it added:

' For example, a plot of land zoned for residential use will be sold for what can be practically built on it considering, among other factors, the various legal limitations and market demands. One will not build anything less to realise the value of the land, unless there is an existing approved development plan that cannot be altered. Accordingly, in the absence of documents that indicate otherwise (for instance, the development plan limiting the land use that must be complied with), the Valuer and the Property Valuer are of the view that it is reasonable to value the asset based on its ?highest and best? use.'

Apparently, the property valuer estimated the worth of Suryamas' s real estate assets at the highest possible valuation.

Therefore that makes us wonder if it is reasonably ' fair' to assume the worth of a 71.52 per cent stake in Suryamas Group at S$306 million.

4. What would Top Global' s shareholders gain from the acquisition?

According to page 19 of the circular, the net assets attributable to the equity holders of Suryamas Group, in Singapore Dollar terms, has been consistently declining in the last three years.

It was S$216 million in FY2011 which dropped to S$192.2 million in FY2012 and S$163 million in FY2013.

Also, in Q1 FY2014, Suryamas Group recorded a net profit of S$199,000 which was just about 5 per cent of its full year profit in FY2013.

After the acquisition, the Net Tangible Assets per share of Top Global will drop to 0.96 Singapore cents compared to 1.17 Singapore cents earlier (page 55 of circular).

Based on these numbers, any reasonable investor would wonder what' s in the deal for the existing independent shareholders of Top Global Ltd.

In response to our queries a spokesman said the company would be happy to address all shareholders? questions at the EGM. ― Investor Central

Source:

http://m.themalaymailonline.com/money/article/investor-central-top-global-limited-why-did-controlling-shareholders-son-se#sthash.dSCdfqJy.dpuf

• This morning, 68 lots done at 39.5cents. Then activity stopped, thereafter 0.1 lot done after lunch.
• On the previous trading day, 68 lots done at 40cents in the morning too.

• Property market is booming worldwide, even in COVID-19 hard-hit countries like Canada and USA. Top Global also did not pay dividends for a decade.  https://www.bloomberg.com/news/articles/2021-03-24/canada-s-biggest-bank-says-the-housing-market-is-overheating
• As of last night' s announcement, Oei Sua Hua purchased 0.66% from open market this month (as 25th March), the highest price paid was 39cents on 25th March. Her direct & indirect stakes raised to 86.16%
• She should have easily accumulated 1% of Top Global (regulatory limit) from open market, steeply below 39 cents.
• The married deal at 39 cents on 10th March did not cite the seller. It was fishy as someone holding 8.1% is be considered " significant shareholder" , but no name was mentioned.

• Many lots were done at 39 cents. Yet only 100.1 lot were purchased by Oei Sua Hua (as of 25th March). That means many were betting that Oei Sua Hua cannot privatize 39 cents. These are sensible bets.
• On 24-26th March, there were about 700-1000 lots being transacted at 39.5 to 42 cents.This group is different than the former. This group or just this person wants to intentionally make it difficult for Oei to privatize so that she might have to negotiate to secure the last few percent to cross the 90% benchmark to delist Top Global.