Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

This is shaping up to be the week when the sanctioning of Schemes by the Courts goes awry.
Last Friday, Hong Kong's High Court <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1005/2020100502577.pdf" target="_blank" rel="noopener">declined to sanction</a> <a href="https://www.smartkarma.com/entities/allied-properties-h-k-limited" target="_blank" data-smartkarma-citation="entities:19953:1" rel="noopener">Allied Properties (H.K.) (56 HK)</a>'s Scheme. (<a href="https://skr.ma/Utws3" target="_blank" rel="noopener">Allied Properties (56 HK): Amateur Hour</a>). I would expect the Offeror, <a href="https://www.smartkarma.com/entities/allied-group-ltd" target="_blank" data-smartkarma-citation="entities:4387:1" rel="noopener">Allied (373 HK)</a>, to appeal the decision,  especially noting the irrelevancy of the headcount test discussed at length in the judgment, which likely influenced the judge's final opinion.
Tomorrow there is a high likelihood that New Zealand's High Court postpones the final hearing on the <a href="https://www.smartkarma.com/entities/metlifecare-ltd" target="_blank" data-smartkarma-citation="entities:19219:1" rel="noopener">Metlifecare Ltd (MET NZ)</a>'s Scheme.
At MET's Scheme Meeting on the <a href="https://www.metlifecare.co.nz/wp-content/uploads/2020/10/NZX-Release-and-Results-Announcement.pdf" target="_blank" rel="noopener">2 October</a>, 90.7% of the votes case voted for the Scheme. 9.14% (or 14.96mn shares) voted against. 
Of those naysayers, 1,000 shares are held by ResIL Investments Limited, who has, in a detailed letter (attached at the end of this insight) flagged what it perceives as breaches in the Takeovers Code, with reference to the valuation methodology in the Scheme Booklet
Those perceived breaches have been submitted to the Takeovers Panel.
Ahead of tomorrow's hearing, the Panel will need to consider ResIL's objections and whether the standard of disclosure is consistent with that required under the Code. If no objection, the Panel will issue a no-objection statement to approve the Scheme.
Yet merely obtaining a no-objection statement from the Takeovers Panel does not necessarily mean that the Court will approve a scheme.
There are no dissent or buy-out rights for shareholders who do not support Schemes in New Zealand. In effect, this is a statutory vacuum. It would be a dangerous precedent if this Scheme is not sanctioned after a disgruntled shareholder contends the contents of the Scheme Booklet are flawed - after the shareholder lost the vote.

This is shaping up to be the week when the sanctioning of Schemes by the Courts goes awry.
Last Friday, Hong Kong's High Court declined to sanction Allied Properties (H.K.) (56 HK)'s Scheme. (Allied Properties (56 HK): Amateur Hour). I would expect the Offeror, Allied (373 HK), to appeal the decision,  especially noting the irrelevancy of the headcount test discussed at length in the judgment, which likely influenced the judge's final opinion.
Tomorrow there is a high likelihood that New Zealand's High Court postpones the final hearing on the Metlifecare Ltd (MET NZ)'s Scheme.
At MET's Scheme Meeting on the 2 October, 90.7% of the votes case voted for the Scheme. 9.14% (or 14.96mn shares) voted against. 
Of those naysayers, 1,000 shares are held by ResIL Investments Limited, who has, in a detailed letter (attached at the end of this insight) flagged what it perceives as breaches in the Takeovers Code, with reference to the valuation methodology in the Scheme Booklet
Those perceived breaches have been submitted to the Takeovers Panel.
Ahead of tomorrow's hearing, the Panel will need to consider ResIL's objections and whether the standard of disclosure is consistent with that required under the Code. If no objection, the Panel will issue a no-objection statement to approve the Scheme.
Yet merely obtaining a no-objection statement from the Takeovers Panel does not necessarily mean that the Court will approve a scheme.
There are no dissent or buy-out rights for shareholders who do not support Schemes in New Zealand. In effect, this is a statutory vacuum. It would be a dangerous precedent if this Scheme is not sanctioned after a disgruntled shareholder contends the contents of the Scheme Booklet are flawed - after the shareholder lost the vote.

After the sanctioning of <a href="https://www.smartkarma.com/entities/allied-properties-h-k-limited" target="_blank" data-smartkarma-citation="entities:19953:1" rel="noopener">Allied Properties (H.K.) (56 HK)</a>'s (<a href="https://skr.ma/vN7NF" target="_blank" rel="noopener">APH) Scheme (Allied Prop (56 HK): Scheme Done. AGL Next?</a>) was thrice delayed by the High Court and further updates from the company shed no light on the issues faced, what was inconceivably feared became apparent last Friday night when the Court <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1005/2020100502577.pdf" target="_blank" rel="noopener">declined to sanction</a> the Scheme.
This afternoon, the High Court<a href="https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=131280&amp;currpage=T" target="_blank" rel="noopener"> judgment</a> appeared on the Hong Kong Judiciary website. 
It is ultimately a frustrating read, one in which some of the Offeror's (<a href="https://www.smartkarma.com/entities/allied-group-ltd" target="_blank" data-smartkarma-citation="entities:4387:1" rel="noopener">Allied (373 HK)</a>) preparatory work was sloppy or poorly prepared.
But the great double-take in this ruling is a large portion of the judgment devoted to the headcount test at the Scheme vote.
APH is incorporated in Hong Kong. S674(c) of the <a href="https://www.hklii.hk/eng/hk/legis/ord/622/s674.html" target="_blank" rel="noopener">Hong Kong Ordinance</a> says “subject to subsection 2(a)…”.  Subsection 2(a) replaced the headcount rule with the 10%-of-float veto. The headcount test was abolished in 2012 after a decision was reached on a <a href="https://www.legco.gov.hk/yr10-11/english/bc/bc03/papers/bc030530cb1-2019-2-e.pdf" target="_blank" rel="noopener">Companies Bill</a>.
It is not clear why Allied's counsel did not raise this abolishment; but instead, butchered an attempt to show a majority in number had occurred, and as a result of this off-piste analysis, negatively influenced the court on sanctioning the Scheme.
I expect Allied to appeal. I do not expect shares to resume trading during an appeal. 
Unfortunately for shareholders who approved the Scheme, payment under the offer appears some way off.

After the sanctioning of Allied Properties (H.K.) (56 HK)'s (APH) Scheme (Allied Prop (56 HK): Scheme Done. AGL Next?) was thrice delayed by the High Court and further updates from the company shed no light on the issues faced, what was inconceivably feared became apparent last Friday night when the Court declined to sanction the Scheme.
This afternoon, the High Court judgment appeared on the Hong Kong Judiciary website. 
It is ultimately a frustrating read, one in which some of the Offeror's (Allied (373 HK)) preparatory work was sloppy or poorly prepared.
But the great double-take in this ruling is a large portion of the judgment devoted to the headcount test at the Scheme vote.
APH is incorporated in Hong Kong. S674(c) of the Hong Kong Ordinance says “subject to subsection 2(a)…”.  Subsection 2(a) replaced the headcount rule with the 10%-of-float veto. The headcount test was abolished in 2012 after a decision was reached on a Companies Bill.
It is not clear why Allied's counsel did not raise this abolishment; but instead, butchered an attempt to show a majority in number had occurred, and as a result of this off-piste analysis, negatively influenced the court on sanctioning the Scheme.
I expect Allied to appeal. I do not expect shares to resume trading during an appeal. 
Unfortunately for shareholders who approved the Scheme, payment under the offer appears some way off.

Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

<div>
Back on the 20 April, <a href="https://www.smartkarma.com/entities/allied-group-ltd" target="_blank" data-smartkarma-citation="entities:4387:1" rel="noopener">Allied Group Limited (373 HK)</a> (AGL) made an <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0420/2020042001582.pdf" target="_blank" rel="noopener">Offer</a> for 75%-held <a href="https://www.smartkarma.com/entities/allied-properties-hk-ltd" target="_blank" data-smartkarma-citation="entities:19953:1" rel="noopener">Allied Properties Hk (56 HK)</a> (APH), by way of a Scheme, at $1.92/share (cash), a 34.2% premium to last close. The Offer consideration was Final, and would be split between a $0.42/share Scheme Consideration and a $1.50 Scheme Dividend.  The Scheme Doc was despatched on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0618/2020061800579.pdf" target="_blank" rel="noopener">19 June</a>. The Court Meeting was held on the 15 July and the resolutions to approve the Scheme was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0715/2020071500859.pdf" target="_blank" rel="noopener">approved</a>. Shares continue to trade until the 14 August (inclusive). Cheques were supposed to be despatched on or before the 8 Sept.
Then something went awry. 
The sanctioning of the Scheme has now thrice been delayed by the High Court. At the last session on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0907/2020090700916.pdf" target="_blank" rel="noopener">7 September</a>, submissions from APL were made to the Court "whether the Scheme was approved by a majority in a number of APL Shareholders present and voting in person or by proxy at the Court Meeting".
Huh? The headcount test doesn't apply to Hong Kong-incorporated companies like APH.
</div>
<div>
As always, more below the fold.
(Shares are currently suspended, so there is no trade here. Look away now if this is not your thing - it will save you time).
</div>


Back on the 20 April, Allied Group Limited (373 HK) (AGL) made an Offer for 75%-held Allied Properties Hk (56 HK) (APH), by way of a Scheme, at $1.92/share (cash), a 34.2% premium to last close. The Offer consideration was Final, and would be split between a $0.42/share Scheme Consideration and a $1.50 Scheme Dividend.  The Scheme Doc was despatched on the 19 June. The Court Meeting was held on the 15 July and the resolutions to approve the Scheme was approved. Shares continue to trade until the 14 August (inclusive). Cheques were supposed to be despatched on or before the 8 Sept.
Then something went awry. 
The sanctioning of the Scheme has now thrice been delayed by the High Court. At the last session on the 7 September, submissions from APL were made to the Court "whether the Scheme was approved by a majority in a number of APL Shareholders present and voting in person or by proxy at the Court Meeting".
Huh? The headcount test doesn't apply to Hong Kong-incorporated companies like APH.


As always, more below the fold.
(Shares are currently suspended, so there is no trade here. Look away now if this is not your thing - it will save you time).


Allied Props (56 HK). Stalled At The Finish

<div>
Back on the 20 April, <a href="https://www.smartkarma.com/entities/allied-group-ltd" target="_blank" data-smartkarma-citation="entities:4387:1" rel="noopener">Allied Group Limited (373 HK)</a> (AGL) made an <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0420/2020042001582.pdf" target="_blank" rel="noopener">Offer</a> for <a href="https://www.smartkarma.com/entities/allied-properties-hk-ltd" target="_blank" data-smartkarma-citation="entities:19953:1" rel="noopener">Allied Properties Hk (56 HK)</a> (APH), by way of a Scheme, at $1.92/share (cash), a 34.2% premium to last close. The Offer consideration was Final, and would be split between a $0.42/share Scheme Consideration and a $1.50 Scheme Dividend.  An interim dividend of HK$0.08/share  for the year ended 31st December, 2019, payable on or around 20th May, was also added, to bring the total payout to $2/share.
</div>
<div>
The initial announcement guided completion around October, suggesting the Scheme Document would be dispatched late August. Then APH  <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0511/2020051100918.pdf" target="_blank" rel="noopener">announced</a> that the date of despatch of the Scheme Document to be no later than 30 June.
</div>
<div>
The Scheme Doc is now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0618/2020061800579.pdf" target="_blank" rel="noopener">out</a>, with the Court Meeting set for the 15 July, an indicative effective date of the 28 August, and payment on the 8 September. The IFA has opined the Offer is fair &amp; reasonable.
</div>
<div>
As always, more below the fold.
</div>


Back on the 20 April, Allied Group Limited (373 HK) (AGL) made an Offer for Allied Properties Hk (56 HK) (APH), by way of a Scheme, at $1.92/share (cash), a 34.2% premium to last close. The Offer consideration was Final, and would be split between a $0.42/share Scheme Consideration and a $1.50 Scheme Dividend.  An interim dividend of HK$0.08/share  for the year ended 31st December, 2019, payable on or around 20th May, was also added, to bring the total payout to $2/share.


The initial announcement guided completion around October, suggesting the Scheme Document would be dispatched late August. Then APH  announced that the date of despatch of the Scheme Document to be no later than 30 June.


The Scheme Doc is now out, with the Court Meeting set for the 15 July, an indicative effective date of the 28 August, and payment on the 8 September. The IFA has opined the Offer is fair &amp; reasonable.


As always, more below the fold.


Allied Props (56 HK)'s Scheme Document Despatched

Hong Kong

Allied Group Limited provides investment, finance and corporate management, and consultancy services.  The Company also trades securities, invests in and develops real estate properties and provides building management and maintenance services.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Allied Group (373 HK)

Metlifecare: Statutory Vacuum

A small Metlifecare shareholder strongly believes the deal needs to be blocked and has lodged an opposition with the Takeovers Panel. This would...

David Blennerhassett

Allied Properties (56 HK): Amateur Hour

Amateur hour by Company Counsel leads to a frustrated judge torpedoing the Allied Properties (56 HK) Scheme. Expect an Appeal.

David Blennerhassett

Last Week in Event SPACE: Vedanta, Cardinal Res., Japan Retail Fund, HSBC, Opticomm, Tiffany/LVMH

Last Week in Event SPACE ... Plus, other events, CCASS movements and Mood Spins. (This insight covers specific insights & comments...

David Blennerhassett

Allied Props (56 HK). Stalled At The Finish

Back on the 20 April, Allied Group Limited (373 HK) (AGL) made an Offer for 75%-held Allied Properties Hk (56 HK) (APH), by way of a Scheme, at...

David Blennerhassett

Allied Props (56 HK)'s Scheme Document Despatched

Back on the 20 April, Allied Group Limited (373 HK) (AGL) made an Offer for Allied Properties Hk (56 HK) (APH), by way of a Scheme, at $1.92/share...

David Blennerhassett

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)