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

Hanergy Thin Film - A Mooted Privatisation Ahead Of Possible Delisting

Quiddity Advisors

Event-Driven

The Scheme Document for <a href="https://www.smartkarma.com/entities/432" target="_blank" data-smartkarma-citation="entities:432:1">Hanergy Thin Film Power (566 HK)</a> has been <a href="http://www3.hkexnews.hk/listedco/listconews/SEHK/2019/0425/LTN20190425007.pdf" target="_blank">dispatched</a> with a court meeting tabled for the 18 May 2018.
The terms remain unchanged from the <a href="http://www3.hkexnews.hk/listedco/listconews/SEHK/2019/0226/LTN20190226755.pdf" target="_blank">initial announcement</a> on the 26 February - the proposal is one SPV share for each Scheme share.
The ultimate objective of the proposal is to list the company on a stock exchange in the PRC; however, it is not certain whether the A-share listing can be achieved.
The IFA, in a heavily disclaimed summary, recommends shareholders vote for the Scheme.
What's New?
We now know the SPV is incorporated in the BVI. Hanergy is incorporated in Bermuda. Upon the Scheme becoming effective, the SPV will be 100% owned by independent shareholders who face "no restrictions ... to sell or transfer their SPV shares in private through the over-the-counter trading". Whatever price that may be.
An Increase in Independents
Independent shareholders of Hanergy now comprise 40.51% of shares out, up from 32.49% in the February announcement. The shares held by the Offeror - Hanergy Mobile Energy Holdings Limited - in concert with subsidiaries, has fallen to 40.14% (16.9bn shares) from 20.3bn, apparently after the enforcement of a share mortgage.  As a result of this adjustment, the 10% blocking stake at the court meeting has increased to 4.05% from 3.25%.
What to Do?
The questions remain as to the ease in which independent shareholders can sell unlisted shares, should the Scheme fail, under Bermuda Company Law and the Articles - a delisting procedure will commence if Hanergy does not resume trading before the end of July - or sell SPV shares should the Scheme pass, under BVI rules and the SPV constitution.
At a guess, from perusing various rules and regulations, there's little to distinguish between the two.
For shareholders angling for A-share exposure, the SPV route appears preferable, or at least fast-tracks proceedings, as it silos independent shareholders into a separate entity. 
<blockquote>
The Offeror has sought advice from its PRC legal advisers and according to the advice of the PRC legal advisers, it is not feasible to achieve the A-Share Listing if the Company has a large number of non PRC Independent Shareholders as it is the case currently. Further, the Offeror’s PRC legal advisers confirmed that it is feasible under the PRC laws and regulations for the A-Share Listco to make application for A-Share Listing if the Independent Shareholders hold the entire share capital of the SPV and the SPV is one of the shareholders of the A-Share Listco.
</blockquote>
For the Offeror, the SPV facilitates the A-share application - although it does not guarantee its approval. And even if shareholders do not choose to exit the SPV AND the A-share listing is approved, the SPV's holding into the A-share can theoretically be diluted via the introduction of new shareholders in a pre-IPO allotment.
Nevertheless, on account of this perceived accelerated A-share application submission under the SPV, I recommend shareholders vote for the Scheme.

The Scheme Document for Hanergy Thin Film Power (566 HK) has been dispatched with a court meeting tabled for the 18 May 2018.
The terms remain unchanged from the initial announcement on the 26 February - the proposal is one SPV share for each Scheme share.
The ultimate objective of the proposal is to list the company on a stock exchange in the PRC; however, it is not certain whether the A-share listing can be achieved.
The IFA, in a heavily disclaimed summary, recommends shareholders vote for the Scheme.
What's New?
We now know the SPV is incorporated in the BVI. Hanergy is incorporated in Bermuda. Upon the Scheme becoming effective, the SPV will be 100% owned by independent shareholders who face "no restrictions ... to sell or transfer their SPV shares in private through the over-the-counter trading". Whatever price that may be.
An Increase in Independents
Independent shareholders of Hanergy now comprise 40.51% of shares out, up from 32.49% in the February announcement. The shares held by the Offeror - Hanergy Mobile Energy Holdings Limited - in concert with subsidiaries, has fallen to 40.14% (16.9bn shares) from 20.3bn, apparently after the enforcement of a share mortgage.  As a result of this adjustment, the 10% blocking stake at the court meeting has increased to 4.05% from 3.25%.
What to Do?
The questions remain as to the ease in which independent shareholders can sell unlisted shares, should the Scheme fail, under Bermuda Company Law and the Articles - a delisting procedure will commence if Hanergy does not resume trading before the end of July - or sell SPV shares should the Scheme pass, under BVI rules and the SPV constitution.
At a guess, from perusing various rules and regulations, there's little to distinguish between the two.
For shareholders angling for A-share exposure, the SPV route appears preferable, or at least fast-tracks proceedings, as it silos independent shareholders into a separate entity. 

The Offeror has sought advice from its PRC legal advisers and according to the advice of the PRC legal advisers, it is not feasible to achieve the A-Share Listing if the Company has a large number of non PRC Independent Shareholders as it is the case currently. Further, the Offeror’s PRC legal advisers confirmed that it is feasible under the PRC laws and regulations for the A-Share Listco to make application for A-Share Listing if the Independent Shareholders hold the entire share capital of the SPV and the SPV is one of the shareholders of the A-Share Listco.

For the Offeror, the SPV facilitates the A-share application - although it does not guarantee its approval. And even if shareholders do not choose to exit the SPV AND the A-share listing is approved, the SPV's holding into the A-share can theoretically be diluted via the introduction of new shareholders in a pre-IPO allotment.
Nevertheless, on account of this perceived accelerated A-share application submission under the SPV, I recommend shareholders vote for the Scheme.

Hanergy Thin Film Power

The Hanergy Dilemma: Vote For The Scheme