Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>On 24 May, <a href="https://www.smartkarma.com/entities/toyo-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:1176:1" rel="noopener">Toyo Construction (1890 JP)</a> (TC) came out fighting against Yamauchi No.10 Family Office (YFO), presenting a poison pill and accusing YFO of "extreme dishonesty" despite standstill agreement. </li>
<li>YFO presented hundreds of pages of defence, TC continued to accuse the YFO co-CIO and others of wrongdoing. To me, TC was clearly acting in bad faith. </li>
<li>After ISS and later Glass Lewis came out against TC's proposal, YFO continued to ask for the PP to be pulled, TC has finally relented. Now we wait some more.</li>
</ul>


On 24 May, Toyo Construction (1890 JP) (TC) came out fighting against Yamauchi No.10 Family Office (YFO), presenting a poison pill and accusing YFO of "extreme dishonesty" despite standstill agreement. 
YFO presented hundreds of pages of defence, TC continued to accuse the YFO co-CIO and others of wrongdoing. To me, TC was clearly acting in bad faith. 
After ISS and later Glass Lewis came out against TC's proposal, YFO continued to ask for the PP to be pulled, TC has finally relented. Now we wait some more.


Toyo Cancels Poison Pill At Last Minute - Range to the Upside

Thematic (Sector/Industry)

<ul>
<li>This is part of a series of M&amp;A guides that our Quiddity* <a href="https://www.smartkarma.com/companies/quiddity-advisors/team" target="_blank" rel="noopener">team</a> is publishing to aid investors in understanding the rules, parameters, possibilities, and processes in M&amp;A. </li>
<li>They are designed to contain links to all the relevant rules, oversight entities, and provide details as to how M&amp;A is conducted and what rules apply.</li>
<li>In many of the insights on deals in specific markets and countries, these insights will be used as points of reference. </li>
</ul>


This is part of a series of M&amp;A guides that our Quiddity* team is publishing to aid investors in understanding the rules, parameters, possibilities, and processes in M&amp;A. 
They are designed to contain links to all the relevant rules, oversight entities, and provide details as to how M&amp;A is conducted and what rules apply.
In many of the insights on deals in specific markets and countries, these insights will be used as points of reference. 


<ul>
<li>On 17 November, <a href="https://www.smartkarma.com/entities/tokyo-kikai-seisakusho-ltd" target="_blank" data-smartkarma-citation="entities:15295:1" rel="noopener">Tokyo Kikai Seisakusho (6335 JP)</a> announced an agreement with ADC to hold off on issuing the rights against an ADC pledge to not call an EGM.</li>
<li>On 18 November, the Supreme Court handed down its rejection of the <a href="https://www.smartkarma.com/entities/asia-development-capital-co-ltd" target="_blank" data-smartkarma-citation="entities:5545:1" rel="noopener">Asia Development Capital (9318 JP)</a> appeals.</li>
<li>The immediate hostility is dialled back, the stalemate is extended. Every buyer from now on is a potential bagholder.</li>
</ul>


On 17 November, Tokyo Kikai Seisakusho (6335 JP) announced an agreement with ADC to hold off on issuing the rights against an ADC pledge to not call an EGM.
On 18 November, the Supreme Court handed down its rejection of the Asia Development Capital (9318 JP) appeals.
The immediate hostility is dialled back, the stalemate is extended. Every buyer from now on is a potential bagholder.


Tokyo Kikai Seisakusho (6335) Court Approved Poison Pill Stalemate Extended (Means Selling)

A bit over a week ago on 22 October, <a href="https://www.smartkarma.com/entities/tokyo-kikai-seisakusho-ltd" target="_blank" data-smartkarma-citation="entities:15295:1" rel="noopener">Tokyo Kikai Seisakusho (6335 JP)</a> held its EGM to have shareholders vote on its Poison Pill designed to limit the expansion of voting rights of its major shareholder <a href="https://www.smartkarma.com/entities/asia-development-capital-co-ltd" target="_blank" data-smartkarma-citation="entities:5545:1" rel="noopener">Asia Development Capital (9318 JP)</a> ("ADC") and its affiliated funds (but not specifically including any other shareholders who may or may not be acting in a highly correlated manner). The Shareholder Approval of the Poison Pill was discussed in <a href="https://www.smartkarma.com/insights/tokyo-kikai-seisakusho-6335-court-approves-poison-pill" target="_blank" data-smartkarma-citation="insights:59400" rel="noopener">Tokyo Kikai Seisakusho (6335) - Shareholders Approve Poison Pill</a>. The shareholder vote announcement at the time did not provide results, but later that night, ADC <a href="http://www.asiadevelop.com/wp-content/uploads/2021/10/a650bad5079f7074791163b02b4dedf5.pdf" target="_blank" rel="noopener">announced</a> that it objected to the fact that its votes had not been counted, and noted that had its votes been counted, it the combination of its votes and the other objectors would have defeated the Poison Pill. Because of the treatment of the major shareholder, it meant that this would definitely end up being decided by the Tokyo District Court last week, then likely appealed. But we knew that beforehand.That's where it went a little weird. While at first glance it appears as if the Tokyo District Court decision sets a terrible precedent (it does), one could imagine there may be legal ramifications if the Tokyo District Court decision is upheld in higher courts.

A bit over a week ago on 22 October, Tokyo Kikai Seisakusho (6335 JP) held its EGM to have shareholders vote on its Poison Pill designed to limit the expansion of voting rights of its major shareholder Asia Development Capital (9318 JP) ("ADC") and its affiliated funds (but not specifically including any other shareholders who may or may not be acting in a highly correlated manner). The Shareholder Approval of the Poison Pill was discussed in Tokyo Kikai Seisakusho (6335) - Shareholders Approve Poison Pill. The shareholder vote announcement at the time did not provide results, but later that night, ADC announced that it objected to the fact that its votes had not been counted, and noted that had its votes been counted, it the combination of its votes and the other objectors would have defeated the Poison Pill. Because of the treatment of the major shareholder, it meant that this would definitely end up being decided by the Tokyo District Court last week, then likely appealed. But we knew that beforehand.That's where it went a little weird. While at first glance it appears as if the Tokyo District Court decision sets a terrible precedent (it does), one could imagine there may be legal ramifications if the Tokyo District Court decision is upheld in higher courts.

Tokyo Kikai Seisakusho (6335) - Poison Pill Approval Appealed and Possible Silver Linings

<a href="https://www.smartkarma.com/entities/tokyo-kikai-seisakusho-ltd" target="_blank" data-smartkarma-citation="entities:15295:1" rel="noopener">Tokyo Kikai Seisakusho (6335 JP)</a> is Japan's largest maker of printing presses. It has a market cap of a whopping $130mm, and that is only after a significant rise in price in the past year or so. 
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/236/999/original/Screenshot+2021-10-23+at+7.11.19+PM.png?1634987494" class="editor-image img-responsive" data-smartkarma-image-id="236999"></figure>

</section>
On 20 July this year, a fund called Asia Investment Fund (along with associate <a href="https://www.smartkarma.com/entities/asia-development-capital-co" target="_blank" data-smartkarma-citation="entities:5545:1" rel="noopener">Asia Development Capital Co (9318 JP)</a> which is an affiliate of Sun Hung Kai) announced they had bought 7.91% of TKS as of 13 July (which required them to file a Large Shareholder Report). Unknown to the public at the time of the 20 July report was that they had purchased 6.81% on 14 July and 6.11% on 15 July and additional 5.35% in the next three trading days which took them to 26.50% by the time they had announced they had purchased their first 5%. The day after they filed the report which said they owned 7.91% - on 21 July - they bought another 6.19% in the market, which meant the day after they filed the first time they owned 32.72% of the company. On 29 July, TKS <a href="https://www.tks-net.co.jp/corporate/wp-content/uploads/2021/07/05aae76ae5d542dcc47469f5462a5975.pdf" target="_blank" rel="noopener">announced</a> that Asia Development Capital held 11.83% as of 29 July (which was a little weird because on the 26th of July the two entities reported holding 21.16%).
Then it got fun. There was a lot of effort by TKS and ADC effectively did not respond until TKS did something which ADC thought they could call out. TKS launched a Poison Pill, and ADC tried to file injunctions rejecting both the poison pill and urging the court to require TKS to count their votes held on margin (which is a question). The Court will decide after the EGM.
A list of all the interaction and announcements thereto is at <a href="https://www.tks-net.co.jp/aif/" target="_blank" rel="noopener">https://www.tks-net.co.jp/aif/</a>. The most recent announcement on Friday is that Shareholders approved the Poison Pill.
More below the fold.

Tokyo Kikai Seisakusho (6335 JP) is Japan's largest maker of printing presses. It has a market cap of a whopping $130mm, and that is only after a significant rise in price in the past year or so. 




On 20 July this year, a fund called Asia Investment Fund (along with associate Asia Development Capital Co (9318 JP) which is an affiliate of Sun Hung Kai) announced they had bought 7.91% of TKS as of 13 July (which required them to file a Large Shareholder Report). Unknown to the public at the time of the 20 July report was that they had purchased 6.81% on 14 July and 6.11% on 15 July and additional 5.35% in the next three trading days which took them to 26.50% by the time they had announced they had purchased their first 5%. The day after they filed the report which said they owned 7.91% - on 21 July - they bought another 6.19% in the market, which meant the day after they filed the first time they owned 32.72% of the company. On 29 July, TKS announced that Asia Development Capital held 11.83% as of 29 July (which was a little weird because on the 26th of July the two entities reported holding 21.16%).
Then it got fun. There was a lot of effort by TKS and ADC effectively did not respond until TKS did something which ADC thought they could call out. TKS launched a Poison Pill, and ADC tried to file injunctions rejecting both the poison pill and urging the court to require TKS to count their votes held on margin (which is a question). The Court will decide after the EGM.
A list of all the interaction and announcements thereto is at https://www.tks-net.co.jp/aif/. The most recent announcement on Friday is that Shareholders approved the Poison Pill.
More below the fold. 

Tokyo Kikai Seisakusho (6335) - Shareholders Approve Poison Pill

Japan

Asia Development Capital Co., Ltd. is an investment holdings company and makes investments in Japan and China. The Company links business partners in both countries to form joint businesses for the development of Japan and China. Their focused area of investments includes private welfare in aging society, urban problem, and recyclable energy.

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Asia Development Capital (9318 JP)

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