In today’s briefing:
- Frasers Hospitality Trust Scheme Announced
- Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements
- MicroStrategy (MSTR US): It’s Cratering Time
- Fraser Hospitality Trust’s Privatisation Offer from Frasers Property Limited
- S&P/ASX June 2022 Rebal Final Look and Crown Resorts Replacements
- Kakao Pay (377300 KS): Alipay Overhang and Potential MSCI Inclusion
Frasers Hospitality Trust Scheme Announced
- This morning, Frasers Hospitality Trust (FHT SP) announced a Scheme Implementation Deed was signed for the S-REIT’s privatisation by its current sponsors TCC Group Investments Limited and Frasers Property Limited.
- The S$500mm borrowing mooted suggested S$0.69/unit; Scheme Consideration is S$0.70/unit in cash against the latest commissioned Adjusted NAV estimate of S$0.6519 (vs last NAV of S$0.6534/unit).
- The deal comes at an all-time high price, slightly exceeding the end-2019 price on a dividend-adjusted basis. This should be done, but it is worth thinking about how.
Crown Resorts (CWN AU): Passive Sell Flow and Potential ASX100/200 Replacements
- Crown Resorts (CWN AU)‘s Second Court hearing is scheduled for 15 June and the stock is likely to stop trading at the close on that day.
- Estimated passive tracker selling is 62m shares (A$809m; 31.2 days of ADV) of Crown Resorts (CWN AU) and that could open up some arb opportunities.
- We expect Whitehaven Coal (WHC AU) will be added to the S&P/ASX 100 Index, while Coronado Global Resources Inc (CRN AU) could be added to the S&P/ASX 200 (AS51 INDEX).
MicroStrategy (MSTR US): It’s Cratering Time
- MicroStrategy Inc (MSTR US) is trading at a ~2% discount to NAV as the crypto rout moves into a higher gear.
- Bitcoin briefly dipped below US$25k in the last 24 hours, an 18-month low. If it falls another 18%, this will trigger a margin call on one of MicroStrategy’s loans.
- All is not well elsewhere in cryptoland. Ethereum touched a 17-month low; the Luna/Terra ecosystem has crashed; and crypto lender Celsus capitulated ~60% this morning after freezing withdrawals.
Fraser Hospitality Trust’s Privatisation Offer from Frasers Property Limited
- Frasers Hospitality Trust (FHT SP) announced a privatisation proposal from Frasers Property Limited at S$0.70 cash per share + permitted distributions (estimated 1.2961 cents).
- The offer is the culmination of a strategic review announced on 8 April. The offer price is attractive in comparison to historical multiples, precedent transactions and historical unit prices.
- At the last close and for the September end effective date, the gross and annualised spread to the total offer price of S$0.713 per unit is 3.3% and 11.1%, respectively.
S&P/ASX June 2022 Rebal Final Look and Crown Resorts Replacements
- The S&P ASX June 2022 index changes were announced on 3rd June as I discussed in S&P ASX June 2022 Rebalance: ADDs Are Mostly Mining Companies; DELs Are Mostly Tech/Financials.
- With the Inclusion/Exclusion events expected to take place at the end of this week, below is a closer look at the price and volume performance of the candidates so far.
- Separately, Crown Resorts (CWN AU) could get deleted from ASX 100 and ASX 200 in the next few trading days and I have picked out the potential replacements.
Kakao Pay (377300 KS): Alipay Overhang and Potential MSCI Inclusion
- Alipay’s sale of 5m shares in Kakao Pay (377300 KS) has caused the stock to slide below its IPO price. Foreign investors have sold while retail have bought last week.
- Alipay still holds 34.7% of Kakao Pay (377300 KS) and this will be an overhang on the stock for some time.
- Kakao Pay (377300 KS) will be added to the FTSE All-World Index at the close on Friday. MSCI inclusion will likely be at the May 2023 SAIR.
Before it’s here, it’s on Smartkarma
