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

Quiddity Advisors

Equity Bottom-Up

In March of this year, the apparel group <a href="https://www.smartkarma.com/entities/esprit-holdings-ltd" target="_blank" data-smartkarma-citation="entities:871:1" rel="noopener">Esprit Holdings (330 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0427/2020042701927.pdf" target="_blank" rel="noopener">announced</a> six German subsidiaries of the company applied for protective shield proceedings to preserve solvency and liquidity for the group. On the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0701/2020070100191.pdf" target="_blank" rel="noopener">1 July</a>, the Düsseldorf District Court gave its "consent for the opening of the insolvency proceedings". A meeting of creditors of the six subsidiaries is scheduled to be held on 19 August 2020. 
At the same time as the solvency shield announcement, Esprit decided to close all its 56 retail stores in Asia outside mainland China, specifically in Singapore, Malaysia, Taiwan, Hong Kong, and Macau. For the nine months ended 31 March 2020, these 56 stores contributed ~HK$267mn or 4% of the group's revenue.  Those stores are now closed. 
Esprit also intends to close 50 stores in Germany (around half its stores operating in the country) by November this year.  For the year ended 30 June 2019, those German stores contributed ~HK$2.2bn or 17% of the Group’s revenue. 
Esprit said it is renegotiating contracts with service providers to obtain more favourable terms. It is estimated that the implementation of the measures described above will translate into savings of ~HK$900mn. These measures will also incur exceptional one-off costs of ~HK$500mn.
Shares closed at an all-time low of HK$$0.58 on the 28 May.
<h2>The New News</h2>
One the 8 July, Esprit received a request from North Point Talent Limited, a vehicle owned by Karen Lo Ki-yan, a descendent of <a href="https://www.smartkarma.com/entities/vitasoy-intl-holdings-ltd" target="_blank" data-smartkarma-citation="entities:2807:1" rel="noopener">Vitasoy Intl Holdings (345 HK)</a>'s founder, to <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0710/2020071000087.pdf" target="_blank" rel="noopener">convene</a> an SGM to remove Anders Christian Kristiansen and Johannes Georg Schmidt-Schultes as directors of the Company.  North Point held 12.074% at the time of the request. 
On the 21 July, the request to remove the directors, via an SGM, was <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0721/2020072101359.pdf" target="_blank" rel="noopener">withdrawn</a> by Lo.  No reason for the withdrawal (or indeed the initial removal) was provided. Kristiansen and Schmidt-Schultes remain as CEO and Group CFO respectively.
Lo picked up more shares in Esprit the same day and now hold 20.7%. 
It's an interesting situation for a company that was once a retailer powerhouse, but now is decidedly out of fashion.
More below the fold.
<hr>
A non-alcoholic drink called Claytons was <a href="https://www.youtube.com/watch?v=ylH43Tcaj60" target="_blank" rel="noopener">promoted</a> in Australia and New Zealand in the 1980s as “the drink you have when you′re not having a drink”. The term "Claytons" is now synonymous with something that represents a lack of commitment.

In March of this year, the apparel group Esprit Holdings (330 HK) announced six German subsidiaries of the company applied for protective shield proceedings to preserve solvency and liquidity for the group. On the 1 July, the Düsseldorf District Court gave its "consent for the opening of the insolvency proceedings". A meeting of creditors of the six subsidiaries is scheduled to be held on 19 August 2020. 
At the same time as the solvency shield announcement, Esprit decided to close all its 56 retail stores in Asia outside mainland China, specifically in Singapore, Malaysia, Taiwan, Hong Kong, and Macau. For the nine months ended 31 March 2020, these 56 stores contributed ~HK$267mn or 4% of the group's revenue.  Those stores are now closed. 
Esprit also intends to close 50 stores in Germany (around half its stores operating in the country) by November this year.  For the year ended 30 June 2019, those German stores contributed ~HK$2.2bn or 17% of the Group’s revenue. 
Esprit said it is renegotiating contracts with service providers to obtain more favourable terms. It is estimated that the implementation of the measures described above will translate into savings of ~HK$900mn. These measures will also incur exceptional one-off costs of ~HK$500mn.
Shares closed at an all-time low of HK$$0.58 on the 28 May.
The New News
One the 8 July, Esprit received a request from North Point Talent Limited, a vehicle owned by Karen Lo Ki-yan, a descendent of Vitasoy Intl Holdings (345 HK)'s founder, to convene an SGM to remove Anders Christian Kristiansen and Johannes Georg Schmidt-Schultes as directors of the Company.  North Point held 12.074% at the time of the request. 
On the 21 July, the request to remove the directors, via an SGM, was withdrawn by Lo.  No reason for the withdrawal (or indeed the initial removal) was provided. Kristiansen and Schmidt-Schultes remain as CEO and Group CFO respectively.
Lo picked up more shares in Esprit the same day and now hold 20.7%. 
It's an interesting situation for a company that was once a retailer powerhouse, but now is decidedly out of fashion.
More below the fold.

A non-alcoholic drink called Claytons was promoted in Australia and New Zealand in the 1980s as “the drink you have when you′re not having a drink”. The term "Claytons" is now synonymous with something that represents a lack of commitment.

Esprit Holdings

Esprit (330 HK): The Claytons Activist?