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

ESR-REIT Placement: Acquisition and AEI Are DPU Accretive but Debt Payment Dilutes

Quiddity Advisors

Event-Driven

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<p>Back on November last year, Quarz Capital Management, one of <a href="https://www.smartkarma.com/entities/sabana-shariah-compliant-reit" target="_blank" data-smartkarma-citation="entities:911:1" rel="noopener">Sabana Shari’ah Compliant REIT (SSREIT SP)</a>'s top 5 unitholders (at the time),  <a href="https://www.smallcapasia.com/wp-content/uploads/2019/12/Quarz-Capital-Management-Open-Letter-Sabana-REIT-and-ESR-Cayman-Nov-2019-FINAL.pdf" target="_blank" rel="noopener">proposed</a> a merger by way of a Trust Scheme between <a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934:1" rel="noopener">ESR-REIT (EREIT SP)</a> and Sabana.</p>
<p>This made perfect sense given the potential conflict of interest within the organisational structure as seen below:</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/174/565/original/image_53041997321606445245932.png?1606445249" class="editor-image img-responsive" data-smartkarma-image-id="174565"></figure>
<p>Nearly nine months after Quarz's proposal, ESR and Sabana jointly <a href="https://links.sgx.com/FileOpen/PressRelease_ESR_REIT_and_SabanaREIT_Announce_ProposedMerger.ashx?App=Announcement&amp;FileID=623899" target="_blank" rel="noopener">announced</a> a merger, whereby each Sabana Unitholder will receive 94 consideration units (new units in ESR) for every 100 Sabana units held. </p>
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<p>In response to ESR <a href="https://links.sgx.com/FileOpen/Proposed%20Merger%20-%20No%20Increase%20of%20Offer%20Price.ashx?App=Announcement&amp;FileID=626445" target="_blank" rel="noopener">announcing</a> on the 6 August it does not intend to increase the Scheme Consideration, Quarz (along with Crane capital, together holding 10% of units out, or 5% each, at the time, now up collectively 11%) <a href="https://e67b5536-3500-4e76-a4b1-1e47f7092aa8.filesusr.com/ugd/517105_b64078d28c29451690e946b507e385fc.pdf" target="_blank" rel="noopener">issued</a> an open letter to Sabana that they intend to reject the proposal at the current terms.</p>
<p>The key issue is the discount to book value under the share swap ratio. </p>
<p>The rhetoric from both sides has not let up, and has only ratcheted up ahead of Sabana's EGM next Friday, the 4 December. </p>
<p>I side with Quarz/Crane on this - this is being done too cheaply. And there are alternative ways to go forward than what is currently on the table. </p>
<p>More below the fold. </p>
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Back on November last year, Quarz Capital Management, one of Sabana Shari’ah Compliant REIT (SSREIT SP)'s top 5 unitholders (at the time),  proposed a merger by way of a Trust Scheme between ESR-REIT (EREIT SP) and Sabana.
This made perfect sense given the potential conflict of interest within the organisational structure as seen below:

Nearly nine months after Quarz's proposal, ESR and Sabana jointly announced a merger, whereby each Sabana Unitholder will receive 94 consideration units (new units in ESR) for every 100 Sabana units held. 


In response to ESR announcing on the 6 August it does not intend to increase the Scheme Consideration, Quarz (along with Crane capital, together holding 10% of units out, or 5% each, at the time, now up collectively 11%) issued an open letter to Sabana that they intend to reject the proposal at the current terms.
The key issue is the discount to book value under the share swap ratio. 
The rhetoric from both sides has not let up, and has only ratcheted up ahead of Sabana's EGM next Friday, the 4 December. 
I side with Quarz/Crane on this - this is being done too cheaply. And there are alternative ways to go forward than what is currently on the table. 
More below the fold. 





ESR-REIT/Sabana: Furphys And Fear-Mongering

Sabana Industrial REIT

ESR-REIT/Sabana: Furphys And Fear-Mongering