Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>When both <a href="https://www.smartkarma.com/entities/china-renewable-energy-inves" target="_blank" data-smartkarma-citation="entities:14033:1" rel="noopener">China Renewable Energy Investment (987 HK)</a> and <a href="https://www.smartkarma.com/entities/hkc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14707:1" rel="noopener">Hkc Holdings (190 HK)</a> were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0113/2021011300128.pdf" target="_blank" rel="noopener">suspended</a> last week <em>pursuant to the Hong Kong Code on Takeovers and Mergers</em>, my expectation in <em><a href="https://skr.ma/DRfv2" target="_blank" rel="noopener">China Renewable Energy (987 HK): Possible Privatisation Offer</a></em>, was that HKC would privatize 56%-held China Renewables.  Not to be.</p>
<p>Last night,(mainly) PRC property developer HKC <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0117/2021011700005.pdf" target="_blank" rel="noopener">announced</a> a privatisation offer by way of a Scheme from the controlling Oei family. The offer price of $8/share is a 120.39% premium to last close and around an eight-year high. The Offer price will not be increased.</p>
<p>An interim dividend of HK$0.13/share has been declared and will NOT be deducted from the cancellation price. </p>
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<p>Key Scheme conditions include at least 75% of Disinterested Shares voting FOR &amp; not more than 10% of the votes attached to ALL the Disinterested Shares against.</p>
<p>Disinterested Scheme shares total 117.16mn or 22.93% of shares out, therefore the blocking stake at the court meeting will be 2.293%. No single shareholder has such a stake.</p>
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<p>The headcount test applies as HKC is Bermuda incorporated. </p>
<p>This looks done.</p>
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<p>As always, more below the fold. </p>

When both China Renewable Energy Investment (987 HK) and Hkc Holdings (190 HK) were suspended last week pursuant to the Hong Kong Code on Takeovers and Mergers, my expectation in China Renewable Energy (987 HK): Possible Privatisation Offer, was that HKC would privatize 56%-held China Renewables.  Not to be.
Last night,(mainly) PRC property developer HKC announced a privatisation offer by way of a Scheme from the controlling Oei family. The offer price of $8/share is a 120.39% premium to last close and around an eight-year high. The Offer price will not be increased.
An interim dividend of HK$0.13/share has been declared and will NOT be deducted from the cancellation price. 

Key Scheme conditions include at least 75% of Disinterested Shares voting FOR &amp; not more than 10% of the votes attached to ALL the Disinterested Shares against.
Disinterested Scheme shares total 117.16mn or 22.93% of shares out, therefore the blocking stake at the court meeting will be 2.293%. No single shareholder has such a stake.


The headcount test applies as HKC is Bermuda incorporated. 
This looks done.

As always, more below the fold. 

HKC (190 HK): Take-Private Offer By Way Of A Scheme

China Renewable Energy Investment / Event-Driven

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<p><a href="https://www.smartkarma.com/entities/china-renewable-energy-inves" target="_blank" data-smartkarma-citation="entities:14033:1" rel="noopener">China Renewable Energy Investment (987 HK)</a> is a micro-cap clean energy play in China.</p>
<p>Last April, 55.66% of issued shares moved within CCASS, from HSBC into BEA. This is <a href="https://www.smartkarma.com/entities/hkc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14707:1" rel="noopener">Hkc Holdings (190 HK)</a>'s stake.</p>
<p>The movement may simply have been an administrative matter. But given the flurry of M&amp;A activity in the PRC renewable energy space, it was worth speculating on the matter.</p>
<p>Both <a href="https://www.smartkarma.com/entities/china-renewable-energy-inves" target="_blank" data-smartkarma-citation="entities:14033:1" rel="noopener">China Renewable Energy Investment (987 HK)</a> and <a href="https://www.smartkarma.com/entities/hkc-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14707:1" rel="noopener">Hkc Holdings (190 HK)</a> are now <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0113/2021011300128.pdf" target="_blank" rel="noopener">suspended</a> pursuant to the Hong Kong Code on Takeovers and Mergers.</p>
<p>Should an Offer be tabled, this would be the fifth Hong Kong-listed, clean-energy company subject to a privatisation or change of control in the last two years - and seventh in which interested parties have been circling.</p>
<p>As always, more below the fold.</p>
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<p></p>
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China Renewable Energy Investment (987 HK) is a micro-cap clean energy play in China.
Last April, 55.66% of issued shares moved within CCASS, from HSBC into BEA. This is Hkc Holdings (190 HK)'s stake.
The movement may simply have been an administrative matter. But given the flurry of M&amp;A activity in the PRC renewable energy space, it was worth speculating on the matter.
Both China Renewable Energy Investment (987 HK) and Hkc Holdings (190 HK) are now suspended pursuant to the Hong Kong Code on Takeovers and Mergers.
Should an Offer be tabled, this would be the fifth Hong Kong-listed, clean-energy company subject to a privatisation or change of control in the last two years - and seventh in which interested parties have been circling.
As always, more below the fold.





China Renewable Energy (987 HK): Possible Privatisation Offer

<p>Back on the 3 October, <a href="https://www.smartkarma.com/entities/huaneng-renewables-corp-h" target="_blank" data-smartkarma-citation="entities:7542:1" rel="noopener">Huaneng Renewables Corp H (958 HK)</a> (HRC) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1003/ltn20191003661.pdf" target="_blank" rel="noopener">announced</a> a privatisation Offer from parent China Huaneng, by way of a Merger by Absorption, at $3.17/share, an 18.73% premium to last close and a 46.08% premium to the closing price when shares were <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0830/ltn201908309995.pdf" target="_blank" rel="noopener">suspended</a> on the 30 August. The Offer price - which is "okay", having traded around that level in June last year - is Final. </p>
<p>As HRC is PRC incorporated, the takeover takes the form of a hybrid offer as its shares cannot be compulsorily acquired. This two-step mechanism involves a scheme-like vote from independent H-shareholders ( ≥ 75% for, ≤10% against) followed by a tendering acceptance condition of 90% of H shares in issue. </p>
<p>China Huaneng and connected parties hold 52.71%, therefore, a blocking stake at the shareholder meeting is 4.729% or 499.7mn shares. No single independent shareholder holds a sufficient quantity of shares to block the scheme.</p>
<p>The H Share Class Meeting will be held on the 6 January. The First closing date is the 20 January - 60 days from the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0320/ltn20190320061.pdf" target="_blank" rel="noopener">Composite Doc</a>.</p>
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<p>The key risk to the deal is a repeat of the <a href="https://www.smartkarma.com/entities/harbin-electric-co-ltd-h" target="_blank" data-smartkarma-citation="entities:11116:1" rel="noopener">Harbin Electric Co Ltd H (1133 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0719/ltn20190719681.pdf" target="_blank" rel="noopener">failed</a> privatisation attempt (<em><a href="https://skr.ma/2i54Q" target="_blank" rel="noopener">Post-Mortem on Harbin Electric</a></em>) earlier this year, in which 88.32% of shares out tendered at the close of the Offer - despite an unprecedented two-month extension.</p>
<p>However, the financial advisor to HRC appears to have learnt valuable lessons from the Harbin transaction towards facilitating the acceptance condition.</p>
<p>Plus there are subtle differences between HRC and Huaneng; the fact Harbin fell short of being privatised by just 1.68%, subtle differences will be meaningful in the HRC deal.</p>
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<p>More detail below.</p>
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<p><em>For much more in-depth coverage of M&amp;A Rules, Regulations, Practices, and Protocols in Hong Kong, please refer to <a href="https://www.smartkarma.com/insights/quiddity-hong-kong-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:29174" rel="noopener">Quiddity Hong Kong M&amp;A Guide 2019</a>.</em></p>
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Back on the 3 October, Huaneng Renewables Corp H (958 HK) (HRC) announced a privatisation Offer from parent China Huaneng, by way of a Merger by Absorption, at $3.17/share, an 18.73% premium to last close and a 46.08% premium to the closing price when shares were suspended on the 30 August. The Offer price - which is "okay", having traded around that level in June last year - is Final. 
As HRC is PRC incorporated, the takeover takes the form of a hybrid offer as its shares cannot be compulsorily acquired. This two-step mechanism involves a scheme-like vote from independent H-shareholders ( ≥ 75% for, ≤10% against) followed by a tendering acceptance condition of 90% of H shares in issue. 
China Huaneng and connected parties hold 52.71%, therefore, a blocking stake at the shareholder meeting is 4.729% or 499.7mn shares. No single independent shareholder holds a sufficient quantity of shares to block the scheme.
The H Share Class Meeting will be held on the 6 January. The First closing date is the 20 January - 60 days from the Composite Doc.

The key risk to the deal is a repeat of the Harbin Electric Co Ltd H (1133 HK) failed privatisation attempt (Post-Mortem on Harbin Electric) earlier this year, in which 88.32% of shares out tendered at the close of the Offer - despite an unprecedented two-month extension.
However, the financial advisor to HRC appears to have learnt valuable lessons from the Harbin transaction towards facilitating the acceptance condition.
Plus there are subtle differences between HRC and Huaneng; the fact Harbin fell short of being privatised by just 1.68%, subtle differences will be meaningful in the HRC deal.

More detail below.



For much more in-depth coverage of M&amp;A Rules, Regulations, Practices, and Protocols in Hong Kong, please refer to Quiddity Hong Kong M&amp;A Guide 2019.



Why Huaneng Renewables Is Not Another "Harbin Electric"

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.

<p><a href="https://www.smartkarma.com/entities/huaneng-renewables-corp-h" target="_blank" data-smartkarma-citation="entities:7542:1" rel="noopener">Huaneng Renewables Corp H (958 HK)</a>/HN Renewables is the largest producer of wind power in China by revenue. On 3 October, HN Renewables disclosed that China Huaneng had a made a voluntary conditional cash offer to acquire all the issued H Shares for HK$3.17 per share. Predictably, in the composite document, the independent board committee and the independent financial advisor (IFA) recommended independent H shareholders to accept the offer.</p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/huaneng-renewables-discloses-a-tempting-privatisation-offer" target="_blank" rel="noopener">our previous note</a>, we stated that the offer is attractive with a strong chance to cross the high threshold required for a successful privatisation proposal in Hong Kong. In this note, we provide our thoughts on the IFA’s valuation methodology. </p></div>

Huaneng Renewables Corp H (958 HK)/HN Renewables is the largest producer of wind power in China by revenue. On 3 October, HN Renewables disclosed that China Huaneng had a made a voluntary conditional cash offer to acquire all the issued H Shares for HK$3.17 per share. Predictably, in the composite document, the independent board committee and the independent financial advisor (IFA) recommended independent H shareholders to accept the offer.In our previous note, we stated that the offer is attractive with a strong chance to cross the high threshold required for a successful privatisation proposal in Hong Kong. In this note, we provide our thoughts on the IFA’s valuation methodology. 

Huaneng Renewables: Thoughts on the IFA Valuation

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<p>The Composite Document for <a href="https://www.smartkarma.com/entities/huaneng-renewables-corp-h" target="_blank" data-smartkarma-citation="entities:7542:1" rel="noopener">Huaneng Renewables Corp H (958 HK)</a> (HRC)'s voluntary conditional offer has now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1121/2019112100049.pdf" target="_blank" rel="noopener">despatched</a>.</p>
<p>The H Share Class Meeting will be held on the 6 January. The First closing date is the 20 January - 60 days from the Composite Doc. If unconditional on that date, the Offer will remain open until the 17 Feb - or 28 days later. Cheques to be despatched no later than the 31 January, assuming unconditional on the 20 January.  The IFA considers the Offer fair and reasonable.</p>
<p>To recap, on the 3 October, HRC <a href="https://www.smartkarma.com/entities/huaneng-renewables-corp-h" target="_blank" data-smartkarma-citation="entities:7542:1" rel="noopener"></a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1003/ltn20191003661.pdf" target="_blank" rel="noopener">announced</a> a privatisation Offer from China Huaneng, by way of a Merger by Absorption.  The Offer price of $3.17/share, an 18.73% premium to last close and 46.08% premium to closing prior to the announcement late August, has been declared "Final."</p>
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<p>It's an "okay" bid with respect to peers. Less "okay" optically as HRC traded above terms as recent as June of last year. </p>
<p>Currently trading at a gross/annualised spread of 6.0%/35.1%. I'd take those odds.</p>
<p>The key risk to the deal won't be the vote, but whether the 90% tendering condition falls short as it did in <a href="https://www.smartkarma.com/entities/harbin-electric-co-ltd-h" target="_blank" data-smartkarma-citation="entities:11116:1" rel="noopener">Harbin Electric Co Ltd H (1133 HK)</a>'s failed privatisation attempt (<em><a href="https://skr.ma/2i54Q" target="_blank" rel="noopener">Post-Mortem on Harbin Electric</a></em>.) </p>
<p>Much more detail below.</p>
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<p><em>For much more in-depth coverage of M&amp;A Rules, Regulations, Practices, and Protocols in Hong Kong, please refer to <a href="https://www.smartkarma.com/insights/quiddity-hong-kong-m-a-guide-2019" target="_blank" data-smartkarma-citation="insights:29174" rel="noopener">Quiddity Hong Kong M&amp;A Guide 2019</a>.</em></p>
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The Composite Document for Huaneng Renewables Corp H (958 HK) (HRC)'s voluntary conditional offer has now been despatched.
The H Share Class Meeting will be held on the 6 January. The First closing date is the 20 January - 60 days from the Composite Doc. If unconditional on that date, the Offer will remain open until the 17 Feb - or 28 days later. Cheques to be despatched no later than the 31 January, assuming unconditional on the 20 January.  The IFA considers the Offer fair and reasonable.
To recap, on the 3 October, HRC  announced a privatisation Offer from China Huaneng, by way of a Merger by Absorption.  The Offer price of $3.17/share, an 18.73% premium to last close and 46.08% premium to closing prior to the announcement late August, has been declared "Final."


It's an "okay" bid with respect to peers. Less "okay" optically as HRC traded above terms as recent as June of last year. 
Currently trading at a gross/annualised spread of 6.0%/35.1%. I'd take those odds.
The key risk to the deal won't be the vote, but whether the 90% tendering condition falls short as it did in Harbin Electric Co Ltd H (1133 HK)'s failed privatisation attempt (Post-Mortem on Harbin Electric.) 
Much more detail below.

For much more in-depth coverage of M&amp;A Rules, Regulations, Practices, and Protocols in Hong Kong, please refer to Quiddity Hong Kong M&amp;A Guide 2019.


Hong Kong

China Renewable Energy Investment Ltd, through its subsidiaries, principally engaged in the business of alternative energy. The Company is an alternative energy project developer focused on China.

China Renewable Energy Investment (987 HK)

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