Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Dongzheng Automotive Finance / Event-Driven

<ul>
<li>On the 19 May, <a href="https://www.smartkarma.com/entities/saic-motor-corp-ltd-a" target="_blank" data-smartkarma-citation="entities:20833:1" rel="noopener">SAIC Motor (600104 CH)</a> acquired <a href="https://www.smartkarma.com/entities/china-zhengtong-auto-services" target="_blank" data-smartkarma-citation="entities:17001:1" rel="noopener">China Zhengtong Auto Services Hldg (1728 HK)</a>'s 71.04% stake in <a href="https://www.smartkarma.com/entities/shanghai-dongzheng-automotive-finance-co-ltd" target="_blank" data-smartkarma-citation="entities:27984:1" rel="noopener">Dongzheng Automotive Finance (2718 HK)</a> at a judicial auction. </li>
<li>Reportedly SAIC was the only bidder. The price paid appears to be at the minimum bid price of HK$1.294/share. </li>
<li>The acquisition will trigger an unconditional Offer for the H shares.  SAIC and ZhengTong have announced the outcome of the auction. But still no word from Dongzheng.</li>
</ul>


On the 19 May, SAIC Motor (600104 CH) acquired China Zhengtong Auto Services Hldg (1728 HK)'s 71.04% stake in Dongzheng Automotive Finance (2718 HK) at a judicial auction. 
Reportedly SAIC was the only bidder. The price paid appears to be at the minimum bid price of HK$1.294/share. 
The acquisition will trigger an unconditional Offer for the H shares.  SAIC and ZhengTong have announced the outcome of the auction. But still no word from Dongzheng.


Shh! SAIC's Unconditional Offer For Dongzheng (2718 HK)

<ul>
<li>The controlling shareholders of <a href="https://www.smartkarma.com/entities/shandong-fengxiang-co-ltd-h" target="_blank" data-smartkarma-citation="entities:29164:1" rel="noopener">Shandong Fengxiang Co Ltd-H (9977 HK)</a>,  a company engaged in chicken breeding, slaughtering, and processing, are unable to meet their debts.</li>
<li>As such, these shareholders who hold 70.92% of shares out in Fengxiang, via domestic shares, have been forced into a judicial auction, the completion of which may trigger an MGO. </li>
<li>Taking pointers from <a href="https://www.smartkarma.com/entities/shanghai-dongzheng-automotive-finance-co-ltd" target="_blank" data-smartkarma-citation="entities:27984:1" rel="noopener">Dongzheng Automotive Finance (2718 HK)</a>'s recent auction means we back out a possible payment around late December - on the assumption an unconditional MGO is triggered.</li>
</ul>


The controlling shareholders of Shandong Fengxiang Co Ltd-H (9977 HK),  a company engaged in chicken breeding, slaughtering, and processing, are unable to meet their debts.
As such, these shareholders who hold 70.92% of shares out in Fengxiang, via domestic shares, have been forced into a judicial auction, the completion of which may trigger an MGO. 
Taking pointers from Dongzheng Automotive Finance (2718 HK)'s recent auction means we back out a possible payment around late December - on the assumption an unconditional MGO is triggered.


Fengxiang (9977 HK): MGO Expected To Follow Judicial Auction

<ul>
<li>A little over two months since PAG Capital won the judicial auction to acquire 70.92% of <a href="https://www.smartkarma.com/entities/shandong-fengxiang-co-ltd-h" target="_blank" data-smartkarma-citation="entities:29164:1" rel="noopener">Shandong Fengxiang (9977 HK)</a>, the acquisition has now cleared all regulatory clearances, including SAMR.</li>
<li>PAG will now be required to make an unconditional Offer for all H-shares at HK$1.5132/share. Separately, PAG intends to delist Fengxiang which involves Scheme-like delisting resolutions. </li>
<li>This is done. The timing for approving the SPA was bang-on with my expectation.</li>
</ul>


A little over two months since PAG Capital won the judicial auction to acquire 70.92% of Shandong Fengxiang (9977 HK), the acquisition has now cleared all regulatory clearances, including SAMR.
PAG will now be required to make an unconditional Offer for all H-shares at HK$1.5132/share. Separately, PAG intends to delist Fengxiang which involves Scheme-like delisting resolutions. 
This is done. The timing for approving the SPA was bang-on with my expectation.


Fengxiang (9977 HK): SPA Completed. Now For The Unconditional MGO

<ul>
<li>PAG Capital has won the judicial auction to acquire 70.92% of <a href="https://www.smartkarma.com/entities/shandong-fengxiang-co-ltd-h" target="_blank" data-smartkarma-citation="entities:29164:1" rel="noopener">Shandong Fengxiang (9977 HK)</a>. </li>
<li>The acquisition remains subject to regulatory clearance (including SAMR). Once greenlit, PAG will be required to make an unconditional Offer for the H-shares at HK$1.5132/share.
</li>
<li>Separately, it is PAG's intention to delist Fengxiang which involves Scheme-like delisting resolutions. </li>
</ul>


PAG Capital has won the judicial auction to acquire 70.92% of Shandong Fengxiang (9977 HK). 
The acquisition remains subject to regulatory clearance (including SAMR). Once greenlit, PAG will be required to make an unconditional Offer for the H-shares at HK$1.5132/share.

Separately, it is PAG's intention to delist Fengxiang which involves Scheme-like delisting resolutions. 


Fengxiang (9977 HK): PAG's Unconditional MGO And Proposed Delisting

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<ul>
<li>PAG is the successful bidder for <a href="https://www.smartkarma.com/entities/shandong-fengxiang-co-ltd-h" target="_blank" data-smartkarma-citation="entities:29164:1" rel="noopener">Shandong Fengxiang (9977 HK)</a>'s controlling shareholder’s 70.92% stake at HK$1.5132 per H Share (RMB1.3822 per domestic share).</li>
<li>As PAG has no compulsory acquisition rights, it will also seek shareholder delisting approval. The MGO is not conditional on the approval of the delisting resolution.</li>
<li>The share sale transfer requires SAMR approval which will be forthcoming. Our best guess is the MGO completes end-January 2023. At the last close, the gross spread is 14.6%.</li>
</ul>


PAG is the successful bidder for Shandong Fengxiang (9977 HK)'s controlling shareholder’s 70.92% stake at HK$1.5132 per H Share (RMB1.3822 per domestic share).
As PAG has no compulsory acquisition rights, it will also seek shareholder delisting approval. The MGO is not conditional on the approval of the delisting resolution.
The share sale transfer requires SAMR approval which will be forthcoming. Our best guess is the MGO completes end-January 2023. At the last close, the gross spread is 14.6%.


Fengxiang’s Unconditional MGO at HK$ 1.5132 from PAG

China

Shanghai Dongzheng Automotive Finance Co., Ltd. offers auto finance products and services for the purchase of luxury brand cars. The Company provides automotive retail loan, automotive dealer loan, and other services. Shanghai Dongzheng Automotive Finance serves customers in China.

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Dongzheng Automotive Finance (2718 HK)

Shh! SAIC's Unconditional Offer For Dongzheng (2718 HK)

Dongzheng remains suspended so there is nothing to do yet. This should trade very tight to terms, possible through terms, given a larger credible...

David Blennerhassett

Fengxiang (9977 HK): MGO Expected To Follow Judicial Auction

Shandong Fengxiang (9977 HK)'s prior controlling shareholder were forced to unload shares at an auction in 2022 to meet debts, paving the way for...

David Blennerhassett

Fengxiang (9977 HK): SPA Completed. Now For The Unconditional MGO

This is done. The timing for approving the SPA was bang-on with my expectation. Payment under this MGO should occur in early Jan, Fengxiang is...

David Blennerhassett

Fengxiang (9977 HK): PAG's Unconditional MGO And Proposed Delisting

PAG has won the auction to acquire 70.92% of Shandong Fengxiang (9977 HK). Subject to regulatory clearance, PAG will be required to make an...

David Blennerhassett

Fengxiang’s Unconditional MGO at HK$ 1.5132 from PAG

The unconditional MGO is HK$1.5132 per H Share. Our best guess is the MGO completes end-January 2023. At the last close, the gross spread is 14.6%.

Arun George

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