Last Week in Event SPACE: Chiyoda, Japan Post, BTS, JDI, Renault/Nissan, Nexon, Metro, Merlin, Melco

Last Week in Event SPACE ...

• The fact that Chiyoda Corp (6366 JP) finished the year with negative equity probably means the displacement of 20% of the shareholder register.
• Any selldown in Japan Post Bank (7182 JP) by Japan Post Holdings (6178 JP), if it happens, needs to start within the next week or two, in order to avoid an overlap with earnings and restrictions around buying and selling.
• Be bullish because of the opportunity of BTS Group Holdings (BTS TB)'s warrant trade, not because of being fundamentally bullish on BTS.
• Just how invested is Apple Inc (AAPL US) in Japan Display (6740 JP)'s survival/success?
• The Nissan Motor (7201 JP)/Renault SA (RNO FP) Alliance is tilting more to dégringolade than détente.
• The situation was riskier and noisier than it needed to be - and now the Nexon (3659 JP) deal appears to be off.
• EP Global Commerce's extraordinarily generous framing of the bid won't fly with METRO AG (MEO GR)'s board nor with many holders.
• Everything is awesome for Merlin Entertainments (MERL LN) - or at least a little better - as the "Lego"family makes a privatisation play.
• Melco International Development (200 HK) is now neater and tidier after selling its 75% interest in the City of Dreams Mediterranean casino resort in Cyprus to Melco Resorts & Entertainment (MLCO US)​.
• Plus, other events, CCASS movements and Mood Spins.

(This insight covers specific insights & comments involving Stubs, Pairs, Arbitrage, share Classification and Events - or SPACE - in the past week)

Chiyoda Corp (6366 JP) (Mkt Cap: $726mn; Liquidity: $15mn)

Travis Lundy tackled the effects of this past year's losses on Chiyoda's balance sheet, and the fact that it finished the fiscal year with negative equity. This situation is quite like that of Sharp in June-July 2016.

• According to the TSE Securities Listing Regulations, Chiyoda Corp will get "reassigned" from TSE1 to TSE2. This was confirmed on the 28 June.
• That means there are lots of shares to sell at the end of July. It is a big piece of the float.
• This should mean there are three trades here: sell or short sell Chiyoda Corp now (as soon as possible); cover your short later in July. Depending on how far it falls, it might be worthwhile going long; and look at possible Nikkei 225 replacements for Chiyoda Corp.
  
• Read the insight for all the details!

(link to Travis' insight: The Upcoming Chiyoda Corp (6366 JP) TOPIX and Nikkei Kickout)

Japan Post Holdings (6178 JP) / Japan Post Bank (7182 JP)

It is an open secret the government will try to sell US$12bn worth of shares in JPH around Sep 2019, and until the time the deal is eventually done, it will continue to remain an overhang for the stock.

• There was and to a certain extent still is a possibility that JPH can mitigate some of the risk from the selldown by selling down its stake in JPB by mid-July and then using the proceeds to do a larger than expected buyback when the government looks to sell a stake in JPH.
• However, that window is now rapidly closing and the JPH deal will now likely proceed similar to the earlier selldown that took place in 2017, wherein JPH lost about 8% odd in absolute terms and 12% versus TPX from the time the banks were appointed for the deal to the actual deal announcement. Conclusion: it might be better to be short JPH while waiting for the actual selldown.

link to Sumeet Singh's insights:
Japan Post Holdings and Japan Post Bank - Might Be Time to Switch - Part I
Japan Post Holdings and Japan Post Bank - Might Be Time to Switch - Part II

BTS Group Holdings (BTS TB) (Mkt Cap: $4.6bn; Liquidity: $15.5mn)

In November of 2018, Thai conglomerate BTS issued 1 warrant for every nine shares held, for a total of 1,315,710,907 warrants outstanding in the BTS-W4 warrant issue. After ~48.7mm warrants were exercised in the quarter ending in March, the balance of the unexercised Warrants is 1,266,909,369 units.

• The terms in the original info sheet noted the first exercise was the last business day of the quarter ending 28 December 2018, and subsequent quarter-ends after that, with the last Exercise Date being 29 November 2019. That means there are about 5 months left.
• The exercise price is currently THB 10.5/share. The most recent exercise date was 28 June. There will be a dividend paid at the end of July. The warrants will see their strike price adjusted to take that into account. There should be no loss in value.
• The shares trade with a price increment of THB 0.10 and the warrants at 0.01. Good execution traders will recognize the opportunity. This is (at the time of writing) a respectable arb trade for arbitrageurs.

(link to Travis' insight: BTS Group Warrants: Still A Pleasant Arb)

Japan Display (6740 JP) (Mkt Cap: $558mn; Liquidity: $14mn)

JDI popped on news Apple Inc (AAPL US) will invest $100m in the company's recapitalisation/restructuring effort. The announcement is an indicator that JDI is part of Apple's medium-term planning. JDI's OLED technology, while still not being mass-produced on smartphone scales of hundreds of millions of units a year, is viewed as being of better quality than LG Display's equivalent for the Apple Watch, which led JDI to winning Apple Watch orders this year.

• JDI has been volatile of late reacting sharply to any news related to funding for its restructuring plan. The delay in getting confirmation from the Suwa consortium drove the stock down about 21% in mid June but it bounced back after strong support from the Harvest group side of the consortium, rising 31% in three days. The announcement that Cosgrove and Topnotch would withdraw from investment drove the stock down, although Mio Kato, CFA doesn't view the exit of Cosgrove/Topnotch as overly negative.
• On balance, Mio feels that these recent moves are highly positive for JDI, offering support for the company and helping it move through the period of greatest uncertainty. Some factors must still be resolved - such as the location of manufacturing of the Harvest group's OLED production and what sort of royalty stream JDI could expect from that - but if these moves are completed, the risks would become much more manageable.

(link to Mio's insight: Japan Display: Apple's Show of Support Is Critical and Is Why the Stock Is Up 30%)

Renault SA (RNO FP) / Nissan Motor (7201 JP)

The shareholder meeting seemed to be friendlier to Saikawa-san than people expected, and much less friendly to Renault than expected. Saikawa-san's strong tone about capital relations sets the stage for a protracted period of sentiment bouncing back and forth. Renault may be somewhat chastened by the tone of the meeting. They should be.

• Renault may also decide that a real deal with Nissan is further away than they had hoped. There have been constant indications they are in a real rush to do a deal and it is not clear why. This may lead to increased expectations of a deal with FCA. But there is no indication, despite Renault's agreement to Nissan's new governance terms, that Nissan will necessarily strongly support an FCA-Renault deal.
• And there were conflicting/contrasting views in Tokyo this week. Macron said the Alliance is very dear while Economy Minister Maire said that the French government was ready to reduce its stake in Renault to improve the Renault-Nissan Alliance. Macron also said the situation with Carlos Ghosn was personal and had nothing to do with the Alliance. But Ghosn was Nissan chairman and Renault CEO and Chairman, and was in that position because of an agreement between Ghosn, the Renault board, the RAMA, and the French state made in February 2018.
• Travis tilts bearish because he is negative on the US auto market, the Chinese auto market is only worsening, and he sees no signs that Japanese stimulus around the consumption tax hike later this year will unduly favor autos.

(link to Travis' insight: Renault-Nissan : Détente or Dégringolade?)

Nexon (3659 JP) (Mkt Cap: $13.2bn; Liquidity: $34mn)

This Hankyung Business Daily, one of the more reputable business newspapers in Korea, reported that the Nexon deal is off. Several other local media sources confirmed this as well.

• According to HK, KJJ intended to sell Nexon to a strategic investor which could create real business synergies, and more importantly, could justify this deal in the eye of the general public in his home country. Eventually, only two SIs were left in the race: Kakao and Netmarble. To KJJ, Netmarble may cause a market dominance controversy and was dropped. Only Kakao remained but KJJ didn't agree with Kakao's offer price, which is said to be around ₩10tn. KJJ wanted at least ₩13tn.

links to:
Sanghyun Park's insight: KJJ Cancelling Nexon Deal: News Credibility, Reasons & Possible Nexon Breakup?
Douglas Kim's insight: Nexon M&A Deal Is Officially Over....for Now
Travis Lundy's insight: Nexon!!! [Question Marks Intensify]

Holcim Philippines (HLCM PM)(Mkt Cap: $1.7bn; Liquidity: $1mn)

First rumoured back in late January - although arguably the sale was flagged after LafargeHolcim Ltd (LHN SW) divested Holcim Indonesia late last year - San Miguel (SMC PM) ​and Lafarge had entered into a SPA whereby SMC would acquire an 85.73% in HLCM. The agreement places a valuation of US$2.15bn for HLCM on a 100% basis, inclusive of fees for transitional service agreements, or ~PHP16.60-PHP17.00/share, depending on how that 100% is calculated.

• If this transaction were not taking place in the Philippines and did not involve the Ang family, many might consider it difficult to win anti-trust approval. For investors who view PCC approval as a major risk, the share price has already had a great run since January.

(link to my insight: SMC Pursues A Ready-Mixed Fortune With Holcim)

Mod Resources (MOD AU) (Mkt Cap: $90mn; Liquidity: $0.4mn)

Sandfire Resources Nl (SFR AU) has reloaded with an implied Scheme consideration of A$0.45 for MOD, a 45% premium to the closing price of A$0.31/share on the 24 June. SFR had previously approached MOD with an A$0.38/share Indicative Offer back in January this year. MOD shareholders can elect either a cash consideration of A$0.45/share, subject to a cap of A$41.6mn (~25% of the Offer size) OR a scrip consideration of 0.0664 SFR shares for every 1 MOD shares.

• The Offer has the unanimous backing of MOD's board who collectively hold 7.02%. Metal Tiger will vote its 10.48% stake (& up to 19.9% after the exercise of 40mn options) in favour of the scheme.
• As the cash portion is capped at 25% of the deal size, it is critical for the deal to get up that SFR's share price does not react overly negative to the transaction. The absence, to date, of discovery from exploring the Greater Doolgunna District and DeGrussa's declining mine life need to be addressed. MOD's T3 project provides the necessary scale for SFR. Shares are off 7% since the announcement. SFR was down 7% on the announcement.
• This deal appears priced to complete. A competing suitor cannot be ignored - it's not a big deal. Expect completion under the current deal to occur late October/Early November. Trading at a gross/annualised return of 7.1%/19.9% to the cash terms.

(link to my insight: China Power's Scheme Document Dispatched)

Briefly ...

Woongjin Thinkbig (095720 KS) plans to resell its 25.08% stake in Coway Co Ltd (021240 KS). This announcement comes after Woongjin Group reacquired Coway only three months ago from MBK Partners (which originally acquired Coway from Woongjin Group more than six years ago). Woongjin Energy (103130 KS) recently entered into bankruptcy and the Woongjin Group's entire credit ratings have started to decline. Domestic credit rating agencies have lowered Woongjin Co Ltd (016880 KS)'s credit rating to BBB- due to the possibility of Woongjin Energy's failure and a decline in creditworthiness of its affiliate Thinkbig. (link to Douglas' insight: Korea M&A Spotlight: Woongjin Group Plans to Re-Sell Coway)

METRO AG (MEO GR) (Mkt Cap: $6.6bn; Liquidity: $20mn)

German retailer Metro has received an all-cash takeover offer from EP Global Commerce (EPGC), an investment vehicle controlled by Czech billionaire Daniel Kretinsky, at an offer price of €16.00 per ordinary share and €13.80 per preference share of Metro AG. The offer values Metro AG at an Enterprise Value of €8.8 Bn. EPGC initially started building a stake in Metro in August 2018 where they acquired a 10.9% stake spurring takeover speculation in the market and a subsequent rise in the share price. As a result, EPGC have claimed the offer price "contains a premium of 34.5 percent on the unaffected share price level," referring to the price level in August 2018.

• The board of Metro has claimed that the offer "substantially undervalues the company and does not reflect its value creation plan", and argued that the Offer price represents a premium of just 3% over the 21 June undisturbed price. The Offer is opportunistic compared to peer pricing. It is quite a bit lower on EV/Sales, EV/EBITDA, and PER than the mean of a peer basket.
• EPGC currently has control over 31.5% of the target's shares including its direct stake (10.9%), irrevocables (15.2%) and a call option with Ceconomy (5.4%). Out of the remaining 68.5% of the target's shares, Meridian Foundation and Beisheim Holding own 21% between them. The remainder of 47.5% can be considered as free-float. The offer is conditional on satisfying a minimum acceptance threshold of 75%.
• A priori, Travis expects this is worth a long position on the pre-event. There is not much premium built into it, and if someone else were to come along at a higher price, this could end up being a decent position. There is obviously a stake of 31.5% for sale - if EPGC don't win the deal, he doubts they would want to hold it forever, and Haniel and Ceconomy are effectively out.

(link to Travis' insight: METRO Move May Mean More)

Altran Technologies Sa (ALT FP) (Mkt Cap: $4bn; Liquidity: $17mn)

French-based IT consultancy firm Capgemini SA (CAP FP) announced its plan to acquire smaller domestic rival Altran via a Voluntary Tender Offer for a cash consideration of €14.00/share (a 22% premium to last close) - restated for a €0.24/share dividend to be detached on the 1 July - valuing the target at an market cap and enterprise value of around €3.6bn and €5.0bn. Capgemini has also signed a definitive agreement to acquire a 11% stake in Altran from a group of investors led by Apax Partners, Altran's largest shareholder.

• The merger boosts Capgemini's scale and service portfolio into industries such as aerospace, automotive and telecommunications - plus expands its presence in engineering and R&D, two key growth areas for IT-outsourcing companies, helping bridge the gap to key competitor Accenture Plc Cl A (ACN US).
• For Altran shareholders, the Offer pricing appears fair, valuing the company at approximately where Capgemini is trading on forward earnings. A counteroffer is possible, but Capgemini already has support from 11% of shares out. Plus, shares have yet to close through terms.
• This friendly deal ticks all the right boxes: board approvals, key shareholder support, negligible competition concerns, and generally positive market feedback as the deal seeks to close the gap with rivals - CAP's shares traded up on the announcement. Expect Altran to trade tight to terms up until completion.

(link to my insight: Capgemini Snaps Up Smaller Rival Altran)

Merlin Entertainments (MERL LN) (Mkt Cap: $5.8bn; Liquidity: $14mn)

Merlin, which invests and operates entertainment assets such as almost two dozen Madame Tussauds, 9 LegoLand parks, the CocaCola London Eye, Sea Life, and Peppa Pig's World of Play has agreed to be taken private at a two-year high price of GBp 455/share by Blackstone and Kirkbi - the family office and investment co of the Kristianson "Lego" family - with CPPIB (Canada Pension Plan Investment Board) as a co-investor. That's a 15.2% premium to yesterday's close and a 36.8% premium to the close of the day before The ValueAct Letter (i.e. 22 May).

• ValueAct is the number two shareholder. They bought in two years ago and the stock has floundered somewhat since. ValueAct wrote a letter suggesting they sell themselves, and asked for the deal at a mid-GBP4 price/share. Kirkbi and Blackstone who had owned the company for 8 years between 2005-2013 joined by CPPIB have bid "mid-GBP4 price/share" a month later and the company has agreed.
• Because Kirkbi owns 30% and is part of the buying entity, Travis doubts a competing Scheme is that likely. If Kirkbi refused to respond, it would not sell and there would be no deal. Management would be reluctant to engage in a situation which was hostile to one of their main IP partners (Lego) so would probably discourage other bidders from coming in.
• As it is trading 1% to terms, Travis does not expect much upside or downside to this. If anything, there could be a small possibility of a slight kiss (upwards) to terms if enough people got upset, but given the price goes back to the price of the days before the large fall in October 2017 when a trading update clarified that summer 2017's terror attacks had meant slowing park attendance in the UK and the stock fell, He thinks the deal is likely to stand as-is. Travis would take profits at GBp 449-450 unless you are quite bearish equities for the rest of the year.

(link to Travis' insight: Merlin Entertainment: Everything Is Awesome... Or At Least Better.... )

Panalpina Welttransport Holding (PWTN SW) (Mkt Cap: $5.4bn; Liquidity: $17mn)

The Main Offer Period announced by DSV A/S (DSV DC) has been extended until the 17th of July. The original Public Exchange Offer announcements stipulated DSV reserved the right to extend the closing of the offer in one or more extensions totalling a maximum of 40 days (it would require Swiss Takeover Board pre-approval to extend beyond 40 additional days).

• Travis expects the extension may have to do with extending the timing to allow more antitrust approvals to come in before it gets too late in the process. He does not expect this deal to fail.
• He is also not overly bullish the combined entity at the current pro-forma valuation. Street consensus implies a very high forward EV/EBIT multiple and a very high long-term earnings growth rate of some 15+%. As consolidation continues, price competition will result and at a certain point, costs cannot be cut more. Expect ongoing slow growth in trade and expenses related to IMO2020 to hamper expectations.
• Trading at a spread of 44bp gross return at the current prices at the time of the insight, there isn't much to gain from the arb. That is actually better than 44bp because of the negative yield of rates under one year (and longer). All told, depending on your borrow costs and funding haircuts, you might be able to get a bit over 3.0-3.5% at these levels. Travis would rather be out of DSV/Panalpina than in at this point.

(link to Travis' insight: DSV Offer for Panalpina Extended)

Melco International Development (200 HK) ​/ Melco Resorts & Entertainment (MLCO US) ​

Melco Int'l has ​announced the sale of its 75% holding in ICR Holdings, the vehicle developing an integrated casino in Cyprus, to Melco Resorts ​for US$375mn or HK$2.9bn. The consideration will be satisfied via the issuance of 18.5mn Melco Resorts ADSs or ~4% of shares out. Subsequent to the sale, Melco will hold 55.8% in Melco Resorts, up from 54.05% currently. Melco Int'l also launched a privatisation offer for its catering business earlier this month.

• The sale of ICR reduces the "noise" at the parent level, and the stub contribution to NAV; and increases the NAV by ~3.4%, all else being equal, or around 5.5% of Melco Int'l market cap. Melco Resorts now accounts for ~95% of Melco Int'l GAV, up from 92% prior to the sale.
• The result is that Melco Int'l is a cleaner, single stock holding company, which should facilitate a narrowing in the NAV discount. This sale to Melco Resort and AREL's privatisation demonstrate Melco Int'l's intention to clean house, either with a view to narrowing the discount to NAV and/or a precursor to further group restructuring.

(link to my insight: StubWorld: Melco Further Cleans House)

First Pacific Co (142 HK)

Having closed his set-up trade at the end of May, Curtis Lehnert recommends getting back in after First PAC's discount to NAV has widened. The company and affiliates have made steps to unlock the holding company discount such as the selling of its 50% stake in Australasian food producer Goodman Fielder, and Indofood Sukses Makmur Tbk P (INDF IJ)'s (failed) attempt to privatise Indofood Agri Resources (IFAR SP) as the group focuses on its investments in core sectors in Asian emerging markets.

(link to Curtis' insight: TRADE IDEA - First Pacific Stub (142 HK): Round Two with Catalysts)

Stub Wrap For 2019 YTD

An index of the average NAV discount of a basket of 48 Holdcos I have constructed has bounced off January lows, but still trades below the one-year average (of the basket average) and below where the average traded a year ago.

• Cross-border Holdcos have outperformed the basket in 2019. Active Holdcos generally performed better than the average Holdco.
• Passive and illiquid Holdcos underperformed, as did Holdcos listed in Hong Kong and Korea. The average NAV discount for Hong Kong Holdcos is at a 2 STD to its mean.
• Worst performers (discount widening): For readers of Stubworld, the following is no surprise - Hang Lung (10 HK), Ayala Corporation (AC PM), PCCW Ltd (8 HK), Pou Chen (9904 TT) and Young Poong (000670 KS). The three Hong Kong stubs have been impacted by index rebalancing deletions or potential future deletions.
• Best performers (discount narrowing): Hankook Tire Worldwide (000240 KS), Jardine Cycle & Carriage (JCNC SP) & Wheelock (20 HK).

(link to my insight: StubWorld: A 2019 Review In Charts)

BGF Co Ltd (027410 KS) / BGF Retail (282330 KS)

BGFR gained 6.44% on Thursday while BGFC was flat. There remains ongoing ownership transfer between HSF and his eldest son, but this dynamic is widely known in the market. This looked like a stub set-up trade and Sanghyun agrees.

(link to Sanghyun's insight: BGF Stub: Rare Moment of Stub Trade)

S.M.Entertainment Co (041510 KS) / Yg Entertainment (122870 KS)

Recently KB Asset Management requested SME start a dividend payout of policy of 30%, amongst other measures. Ideally, SME should merge with Like Planning, provide annual dividend yield of 3%, and buyback/cancel shares worth about 3% of shares outstanding, but Douglas believes a dividend yield of 1% and a 1% buyback is more realistic.

• In contrast to SME's need to improve corporate governance, YGE has faced considerable media backlash - such as several actors questioned for drug use - which resulted in the Chairman and CEO stepping down. Still, the apportionment of an insider as CEO suggests the Yangs are likely to be pulling the strings behind the scenes. The damage to YGE's reputation, may make it difficult for the company to recruit the "really top-class" young talents. Many global media companies and outlets may be hesitant in doing business with YG Entertainment. Douglas Kim recommends going long SME and short YGE.
  

(link to Douglas' insight: A Pair Trade Idea Between SM Entertainment & YG Entertainment (Aka "The Drugstore"))

For the month of June, eight new deals were discussed on Smartkarma with an overall deal size of US$165bn. This number does not include AGL Energy Ltd (AGL AU)'s very short-lived indicative US$2.1bn approach for Vocus Communications (VOC AU). The average premium for the new deals announced in June was 24%, while the average for the first six months of 2019 is ~30%. This insight provides a summary of ongoing M&A situations and a recap of news associated with each event situation in June.

(link to my insight: (Mostly) Asia M&A: June 2019 Roundup)

• Asia Satellite Telecom Holdings Ltd (1135 HK) has received a privatisation Offer (by way of a Scheme) from majority-shareholders Citic/Carlyle Group at $10.22/share, a 23.43% premium to last close, although the premium is probably higher as there was an uptick in price and volume shortly before the stock was suspended. Typical Scheme conditions apply. Scheme shares total 25.57% of shares out so a blocking stake is 2.557%. Either IVA or Aberdeen could block but it is not clear why they would. Headcount test applies.

• As expected, the Offer for Memtech International (MTEC SP) has been extended to 12 July (or such later date).

• Close, but not close enough. Indofood Agri Resources (IFAR SP)'s Offer has lapsed having closed with valid acceptances of 88.08%, just short of the 90% condition.

• The Scheme Booklet for Xenith Ip (XIP AU) has been dispatched. The Scheme Meeting will be held on the 25 July with an expected implementation date on the 15 August.

• The circular for Tianneng Power Intl (819 HK)'s spin-off and separate A-share listing of Tianneng Battery Group has been dispatched. The EGM will be held on the 12 July. Decent-sized company, generating net profit of RMB1.06bn in FY18. Looks like a new stub, provided the A-share listing is approved.

• The ACCC has raised preliminary concerns as to the Automotive Holdings (AHG AU) ​/ Ap Eagers Ltd (APE AU)​ merger, specifically in the Newcastle/Hunter Valley region. The ACCC has less a concern in the Melbourne, Sydney and Brisbane areas, and nationally. APE & AHG are assessing options to facilitate ACCC approval. These issues look like they can be easily remedied.

• A mixed bag announcement from Aveo Group (AOG AU). It is in discussions with one party as to a Scheme. If an agreement cannot be reached by the 22 July, discussions will be discontinued. No price was given. On account of a subdued property market, Aveo expects FY19 underlying profit to be A$50mn compared to A$127.2mn in FY18. Shares tanked on the news.

• DuluxGroup Ltd (DLX AU) announced that the NZ OIO has granted consent to Nippon Paint's proposed acquisition. The Scheme Meeting will be held on the 31 July.
• Gbst Holdings (GBT AU) announced that it did not reach an Exclusivity and Process Deed with Bravura on Friday. Bravura had recently bumped its indicative Offer to A$3.00, up from A$2.72 in mid-June and from A$2.50 in April. GBST added it "has now received other non-binding confidential competing proposals to acquire 100% of the ordinary shares of GBST via cash offers at a price higher than $3.00 per share".

• The shares of Yungtay Engineering (1507 TT)​ have continued to drift upward. It is not clear why they would, but control is still elusive for all. There is currently a judicial process ongoing whereby Hitachi Elevator asked for an annulment of the April 18 shareholder meeting and vote process which handed control of the board over to the Baojia Group of "market shareholders". It is expected that arguments will be heard July 3rd.

My ongoing series flags large moves (~10%) in CCASS holdings over the past week or so, moves which are often outside normal market transactions. These may be indicative of share pledges. Or potential takeovers. Or simply help understand volume swings.

Often these moves can easily be explained - the placement of new shares, rights issue, movements subsequent to a takeover, amongst others. For those mentioned below, I could not find an obvious reason for the CCASS move.