Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

<ul>
<li>Back in June 2017, <a href="https://www.smartkarma.com/entities/toray-industries-inc" target="_blank" data-smartkarma-citation="entities:625:1" rel="noopener">Toray Industries (3402 JP)</a> acquired a 28.03% stake in <a href="https://www.smartkarma.com/entities/pacific-textiles-holdings" target="_blank" data-smartkarma-citation="entities:12638:1" rel="noopener">Pacific Textiles (1382 HK)</a> (@ HK$10/share). Rumours that Toray would take this stake to 50% never unfolded.</li>
<li>Pacific Textiles is currently trading at HK$1.30/share, its lowest level outside of the GFC. </li>
<li>Relatively inexpensive, high digit yield and M&amp;A angle, Pacific Textiles remains attractive. This is supported by the recent Offer for <a href="https://www.smartkarma.com/entities/weiqiao-textile-co" target="_blank" data-smartkarma-citation="entities:3690:1" rel="noopener">Weiqiao (2698 HK)</a> and David Webb taking a 5% stake. </li>
</ul>


Back in June 2017, Toray Industries (3402 JP) acquired a 28.03% stake in Pacific Textiles (1382 HK) (@ HK$10/share). Rumours that Toray would take this stake to 50% never unfolded.
Pacific Textiles is currently trading at HK$1.30/share, its lowest level outside of the GFC. 
Relatively inexpensive, high digit yield and M&amp;A angle, Pacific Textiles remains attractive. This is supported by the recent Offer for Weiqiao (2698 HK) and David Webb taking a 5% stake. 


Pacific Textiles (1382 HK): Material Benefits

Event-Driven

<ul>
<li>The Companies (Amendment) Act 2021 of the Cayman Islands (Amendment Act), which will come into force on 31 August 2022, will abolish the current 'headcount test'.</li>
<li>Those companies incorporated in the Cayman Islands, and subject to a members' Scheme of Arrangement, were previously required to satisfy the headcount test under section 86 of the Companies Act.</li>
<li>This development clarifies previous uncertainty/ambiguity which could arise, with 'take private' deals of Cayman-incorporated, Hong Kong-listed companies, where a Scheme is the favoured privatisation path.</li>
</ul>


The Companies (Amendment) Act 2021 of the Cayman Islands (Amendment Act), which will come into force on 31 August 2022, will abolish the current 'headcount test'.
Those companies incorporated in the Cayman Islands, and subject to a members' Scheme of Arrangement, were previously required to satisfy the headcount test under section 86 of the Companies Act.
This development clarifies previous uncertainty/ambiguity which could arise, with 'take private' deals of Cayman-incorporated, Hong Kong-listed companies, where a Scheme is the favoured privatisation path.


Cayman Islands: Headcount To Be Decapitated On 31 August

<ul>
<li>
<a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a>'s Scheme was comfortably <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0426/2022042601954.pdf" target="_blank" rel="noopener">voted through</a> by shareholders.  </li>
<li>The overarching risk to the transaction, that it may fail the headcount test, largely turned out to be a storm in a tea cup. </li>
<li>Tomorrow is the last day of trading with payment under the Scheme on or before the 20 May. Index sell flows come at the close. </li>
</ul>



Razer Inc (1337 HK)'s Scheme was comfortably voted through by shareholders.  
The overarching risk to the transaction, that it may fail the headcount test, largely turned out to be a storm in a tea cup. 
Tomorrow is the last day of trading with payment under the Scheme on or before the 20 May. Index sell flows come at the close. 


<ul>
<li>The Cayman Islands is seeking to eliminate the "headcount test" for Schemes of Arrangement.</li>
<li>Such an amendment will provide greater certainty for Hong Kong Schemes, wherein 59% of all listed companies are Cayman Islands incorporated. </li>
<li>This development arrives a tad late for <a href="https://www.smartkarma.com/entities/razer-inc" target="_blank" data-smartkarma-citation="entities:24380:1" rel="noopener">Razer Inc (1337 HK)</a>, which is trading wide to terms, exactly on account of the fact it could potentially fail the headcount test. </li>
</ul>


The Cayman Islands is seeking to eliminate the "headcount test" for Schemes of Arrangement.
Such an amendment will provide greater certainty for Hong Kong Schemes, wherein 59% of all listed companies are Cayman Islands incorporated. 
This development arrives a tad late for Razer Inc (1337 HK), which is trading wide to terms, exactly on account of the fact it could potentially fail the headcount test. 


<ul>
<li>PRC department store play <a href="https://www.smartkarma.com/entities/golden-eagle-retail-group" target="_blank" data-smartkarma-citation="entities:470:1" rel="noopener">Golden Eagle (3308 HK)</a> has announced a privatisation offer, by way of a Scheme, at $6.88/share, a 40.41% premium to last close. The price is final.</li>
<li>The Offeror is the Wang family, Together with concert parties, they control 80.29%. 7.18% of the remaining 19.71% of the disinterested stakeholders have given an irrevocable. </li>
<li>Apart from shareholder approval, there are no key regulatory approvals to be obtained. </li>
</ul>


PRC department store play Golden Eagle (3308 HK) has announced a privatisation offer, by way of a Scheme, at $6.88/share, a 40.41% premium to last close. The price is final.
The Offeror is the Wang family, Together with concert parties, they control 80.29%. 7.18% of the remaining 19.71% of the disinterested stakeholders have given an irrevocable. 
Apart from shareholder approval, there are no key regulatory approvals to be obtained. 


Golden Eagle (3308 HK): Wang Family Delisting Offer

Hong Kong

Yorkey Optical International Cayman Ltd. manufactures plastic and metal parts and components of optical and optoelectronic products.  The Company produces parts for copiers, computer peripherals, handsets, film cameras, and other products.

Yorkey Optical International Cayman (2788 HK)

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Yorkey Optical International Cayman (2788 HK)

Pacific Textiles (1382 HK): Material Benefits

The key factors which made Pacific Textiles attractive previously (value, solid dividend, M&A angle) remain intact. If small-cap names are your...

David Blennerhassett

Cayman Islands: Headcount To Be Decapitated On 31 August

On 31 August 2022, the Cayman Islands will abolish the current 'headcount test' which a Cayman Islands members' Scheme (including HK companies) had...

David Blennerhassett

Razer Inc (1337 HK): Storm In A Tea Cup

This will trade tight tomorrow, potentially even edging above terms, depending on short interest. Play the spread if you can get in a few percent...

David Blennerhassett

Caymans To Decapitate The Headcount

This is a positive development. Avoiding another Glorious Property fiasco - or even the more dodgy share splitting seen in the PCCW Ltd (8 HK)...

David Blennerhassett

Golden Eagle (3308 HK): Wang Family Delisting Offer

Assuming there is enough here for the deal to get up, and assuming payment around the middle of September, I'd pay up to HK$6.61/share, or ~15%...

David Blennerhassett

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