Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

HK Type 4 license through Ballingal Investment Advisors Ltd. ("BIA" or "BIAL")

BACKGROUND
I have 20+yrs experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies with most of that time spent managing money. 

4 years in fixed income macro, 8 years running internal hedge fund and 4yrs investment banking at Citi in Japan, 3 years running an Asia multi-strat portfolio at a hedge fund, 4+yrs as an independent special situations analyst.

Pan-Asia Catalysts/Events

CIE Boosts Its Japan Asia Group (3751) TOB Price - Hidden Implications

Japan Asia Group MBO Fails, Now JAG Against Murakami's Higher Bid

Japan Asia Group (3751) : Defense Against Hostile TOB Is Bad News

Murakami-San Launches New JAG (3751) Tender Offer

Quiddity Advisors

Event-Driven

Last November, after <a href="https://www.smartkarma.com/entities/japan-asia-group-ltd" target="_blank" data-smartkarma-citation="entities:12428:1" rel="noopener">Japan Asia (3751 JP)</a> had been trading in a ¥280-350/share range for many months, chairman Yamashita announced a convoluted bid to take the company private at ¥600/share. <a href="https://www.smartkarma.com/profiles/janaghan-jeyakumar-cfa" target="_blank" data-smartkarma-citation="accounts:3173" rel="noopener">Janaghan Jeyakumar, CFA</a> addressed this deal in <a href="https://www.smartkarma.com/insights/japan-asia-3751-jp-management-buyout-should-there-be-a-bump" target="_blank" data-smartkarma-citation="insights:44928" rel="noopener">Japan Asia (3751 JP) Management Buyout: Should There Be a BUMP?</a> where the answer to the title question was YES. Noted Japanese activist Yoshiaki Murakami thought so too and one of his associated companies bought a large stake near the TOB price, then started buying more. And the stock quickly climbed 30% through terms. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/202/910/original/Screenshot+2021-04-27+at+12.17.18+PM.png?1619497251" class="editor-image img-responsive" data-smartkarma-image-id="202910"></figure></section>After accumulating 20% of the stock, they proposed a Tender Offer at 40% through terms at ¥840/share. There was a good reason for this. The original structure effectively allowed the chairman to put up a derisory sum buy the company with Carlyle's help, then sell some hard assets to Carlyle for well more than the entire market cap of the company, and that left him with the stub businesses, which lose money, and an enormous pile of cash PLUS a residual stake in the asset businesses just sold. It was entirely the wrong price. When Murakami-san brought this up, he was rebuffed. Management and Yamashita-san thought so little of his proposal at 40% through that they did not let him do due diligence, then before his bidding entity could obtain approvals, Yamashita-san and Carlyle DOUBLED their bid to ¥1200/share through a little jiggering of how much Yamashita-san put in, and how much of the Sale Assets (notably the PV farm assets) would be held by the stub/residual business. Murakami-san again asked for due diligence, didn't get it, so launched a Tender Offer at ¥1210/share. The Carlyle "MBO" ended up unsuccessful and to block the Murakami bid, on March 1st, the company decided to pay out a special dividend of ¥300/share AND to launch a poison pill rights issuance which would allow Murakami-san to be diluted. This would require a shareholder vote. The record date for both the dividend and the EGM was 18 March, which was just before the end of the Tender Offer on 22 March, which meant Murakami-san would be paying ¥300/share extra. So he withdrew the Tender Offer, then launched an injunction against the rights. He got the injunction, the company appealed, and won the conservation appeal, which was later dismissed. In the meantime, Murakami-san bought more shares on the dip and said that he would launch a new Tender Offer ¥300/share lower than the last one when the matter of the rights was settled.<h3>The NEW News</h3>Yesterday morning before the open, <a href="https://www.smartkarma.com/entities/japan-asia-group-ltd" target="_blank" data-smartkarma-citation="entities:12428:1" rel="noopener">Japan Asia (3751 JP)</a>  <a href="https://www.japanasiagroup.jp/wordpress/wp-content/uploads/2021-4-26.pdf" target="_blank" rel="noopener">announced</a> it was cancelling its planned rights issue.Yesterday during the day the stock rose to ¥946 which was ~4% through the bid Murakami-san had planned. Last night, City Index Eleventh <a href="https://www.businesswire.com/news/home/20210426005380/ja/" target="_blank" rel="noopener">announced</a> that it would launch its planned Tender Offer at ¥910/share (accompanying document link <a href="https://www.japanasiagroup.jp/wordpress/wp-content/uploads/2021-4-26_2.pdf" target="_blank" rel="noopener">here</a>).So here we are again. Japan Asia Group, for its part, announced it would "consider the Tender Offer and respond with its Opinion Statement in a timely manner."Here we go again.

Last November, after Japan Asia (3751 JP) had been trading in a ¥280-350/share range for many months, chairman Yamashita announced a convoluted bid to take the company private at ¥600/share. Janaghan Jeyakumar, CFA addressed this deal in Japan Asia (3751 JP) Management Buyout: Should There Be a BUMP? where the answer to the title question was YES. Noted Japanese activist Yoshiaki Murakami thought so too and one of his associated companies bought a large stake near the TOB price, then started buying more. And the stock quickly climbed 30% through terms. After accumulating 20% of the stock, they proposed a Tender Offer at 40% through terms at ¥840/share. There was a good reason for this. The original structure effectively allowed the chairman to put up a derisory sum buy the company with Carlyle's help, then sell some hard assets to Carlyle for well more than the entire market cap of the company, and that left him with the stub businesses, which lose money, and an enormous pile of cash PLUS a residual stake in the asset businesses just sold. It was entirely the wrong price. When Murakami-san brought this up, he was rebuffed. Management and Yamashita-san thought so little of his proposal at 40% through that they did not let him do due diligence, then before his bidding entity could obtain approvals, Yamashita-san and Carlyle DOUBLED their bid to ¥1200/share through a little jiggering of how much Yamashita-san put in, and how much of the Sale Assets (notably the PV farm assets) would be held by the stub/residual business. Murakami-san again asked for due diligence, didn't get it, so launched a Tender Offer at ¥1210/share. The Carlyle "MBO" ended up unsuccessful and to block the Murakami bid, on March 1st, the company decided to pay out a special dividend of ¥300/share AND to launch a poison pill rights issuance which would allow Murakami-san to be diluted. This would require a shareholder vote. The record date for both the dividend and the EGM was 18 March, which was just before the end of the Tender Offer on 22 March, which meant Murakami-san would be paying ¥300/share extra. So he withdrew the Tender Offer, then launched an injunction against the rights. He got the injunction, the company appealed, and won the conservation appeal, which was later dismissed. In the meantime, Murakami-san bought more shares on the dip and said that he would launch a new Tender Offer ¥300/share lower than the last one when the matter of the rights was settled.The NEW NewsYesterday morning before the open, Japan Asia (3751 JP)  announced it was cancelling its planned rights issue.Yesterday during the day the stock rose to ¥946 which was ~4% through the bid Murakami-san had planned. Last night, City Index Eleventh announced that it would launch its planned Tender Offer at ¥910/share (accompanying document link here).So here we are again. Japan Asia Group, for its part, announced it would "consider the Tender Offer and respond with its Opinion Statement in a timely manner."Here we go again. 

City Index Eleventh OFFICIALLY Launches Next Japan Asia Group (3751) Hostile Tender Offer