Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

HK Type 4 license through Ballingal Investment Advisors Ltd. 

I'm a highly experienced sell-side analyst with in excess of 22 years of covering Asia Pacific equities, the past 19 years immersed in event strategies encompassing M&A risk arbitrage, directional long/short, stub trades and restructuring.  

My background also includes accountancy (liquidation/bankruptcy/receivership) earlier in my career and as a chief financial officer of a global commodity company based in the US and Mexico.

Pan-Asia Catalysts/Events

Discover Singapore: BreadTalk (BREAD SP EQUITY)

Quiddity Advisors

Event-Driven

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<p>On the 24 February, BTG Holdings, an SPV jointly-held by George Quek (BreadTalk's founder and chairman), his wife Katherine Lee (deputy chairman and executive director), and Thai-listed <a href="https://www.smartkarma.com/entities/minor-international-pcl" target="_blank" data-smartkarma-citation="entities:2154:1" rel="noopener">Minor International (MINT TB)</a>, <a href="https://links.sgx.com/FileOpen/Offer_Announcement.ashx?App=Announcement&amp;FileID=597568" target="_blank" rel="noopener">tabled</a> a voluntary conditional cash offer for <a href="https://www.smartkarma.com/entities/breadtalk-group-ltd" target="_blank" data-smartkarma-citation="entities:15888:1" rel="noopener">Breadtalk (BREAD SP)</a> at S$0.77/share, a 19.4% and 30.1% premium to last close and the 30-day VWAP.</p>
<p>Concurrent with the Offer, BreadTalk disclosed a <a href="https://links.sgx.com/FileOpen/BTG_4Q2019_Results.ashx?App=Announcement&amp;FileID=597562" target="_blank" rel="noopener">net loss of S$5.2mn</a> in FY19 compared to a profit of S$15.2mn in FY18; and <a href="https://links.sgx.com/FileOpen/BTG%20-%20Financial%20Covenants%20MTN.ashx?App=Announcement&amp;FileID=597564" target="_blank" rel="noopener">announced</a> a technical breach in the financial covenants in its S$100mn fixed-rate notes.</p>
<p>The loss in FY19 was attributed to the expanding losses in China and Thailand, together with the impact from the protests in Hong  Kong.</p>
<p>China, Singapore, Thailand and Hong Kong accounted for ~23%, ~56%, 7% and 7% of revenue in FY19. </p>
<p>COVID-19 adds more uncertainty. </p>
<p>A recent MAS <a href="https://www.mas.gov.sg/-/media/MAS/EPG/SPF/2020/Survey-Writeup-Mar-2020-Web.pdf?la=en&amp;hash=A5195566D54E3AFC702549C8FE2F3EF63E0AD4AA" target="_blank" rel="noopener">survey</a> pointed to growth of just 0.6% in 2020, down from 1.5% in the December 2019 survey, and accommodation that food service at -1.6%, from 2.1% previously - but that survey was conducted in late Feb. Much has changed since then.</p>
<p>On the 23 March, BreadTalk <a href="https://links.sgx.com/FileOpen/BTG%20-%20Announcement%20on%20Cost%20Saving%20Measures.ashx?App=Announcement&amp;FileID=601951" target="_blank" rel="noopener">announced</a>:</p>
<blockquote>
<p>(a)  with effect from February 2020 until June 2020, reductions of approximately between 30-50% to the pay of employees in China and Hong Kong;  <br> <br>(b)  with effect from March 2020 until June 2020: <br> <br>       (i) reductions of approximately between 10-15% to the executive pay of middle management executives of the Group based in ASEAN countries (including Singapore); and <br> <br>       (ii) reductions of approximately between 30-50% to the executive pay of senior management executives of the Group. </p>
</blockquote>
</div>
<p>The <a href="https://links.sgx.com/FileOpen/Offer_Document.ashx?App=Announcement&amp;FileID=599829" target="_blank" rel="noopener">Offer Document</a> was dispatched on the 9 March and the <a href="https://links.sgx.com/FileOpen/BTG%20-%20Offeree%20Circular%20-%2023%20Mar%202020.ashx?App=Announcement&amp;FileID=601949" target="_blank" rel="noopener">Offeree Circular</a> on the 23 March - the IFA gave a "fair and reasonable" assessment on the Offer.</p>
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<p>The First Close is Monday, the 6th April. BTG has three options by 5.30pm that day, two of which are favourable to the outcome of the Offer.</p>
<p>More below the fold.</p>
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On the 24 February, BTG Holdings, an SPV jointly-held by George Quek (BreadTalk's founder and chairman), his wife Katherine Lee (deputy chairman and executive director), and Thai-listed Minor International (MINT TB), tabled a voluntary conditional cash offer for Breadtalk (BREAD SP) at S$0.77/share, a 19.4% and 30.1% premium to last close and the 30-day VWAP.
Concurrent with the Offer, BreadTalk disclosed a net loss of S$5.2mn in FY19 compared to a profit of S$15.2mn in FY18; and announced a technical breach in the financial covenants in its S$100mn fixed-rate notes.
The loss in FY19 was attributed to the expanding losses in China and Thailand, together with the impact from the protests in Hong  Kong.
China, Singapore, Thailand and Hong Kong accounted for ~23%, ~56%, 7% and 7% of revenue in FY19. 
COVID-19 adds more uncertainty. 
A recent MAS survey pointed to growth of just 0.6% in 2020, down from 1.5% in the December 2019 survey, and accommodation that food service at -1.6%, from 2.1% previously - but that survey was conducted in late Feb. Much has changed since then.
On the 23 March, BreadTalk announced:

(a)  with effect from February 2020 until June 2020, reductions of approximately between 30-50% to the pay of employees in China and Hong Kong;     (b)  with effect from March 2020 until June 2020:           (i) reductions of approximately between 10-15% to the executive pay of middle management executives of the Group based in ASEAN countries (including Singapore); and           (ii) reductions of approximately between 30-50% to the executive pay of senior management executives of the Group. 


The Offer Document was dispatched on the 9 March and the Offeree Circular on the 23 March - the IFA gave a "fair and reasonable" assessment on the Offer.

The First Close is Monday, the 6th April. BTG has three options by 5.30pm that day, two of which are favourable to the outcome of the Offer.
More below the fold.












BreadTalk

BreadTalk: Placed For Take Out