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

Village Roadshow: BGH's Overly Caveated Offer

Village Roadshow: PEP Takes On Family Stoush

Village Roadshow: And ... Action! As BGH Returns

Quiddity Advisors

Event-Driven

<div>
<p>On the 18 May, Aussie theme parks and movie theater operator <a href="https://www.smartkarma.com/entities/village-roadshow-ltd" target="_blank" data-smartkarma-citation="entities:7836:1" rel="noopener">Village Roadshow (VRL AU)</a> entered into <a href="https://www.asx.com.au/asxpdf/20200518/pdf/44hx6rjz13vp2b.pdf" target="_blank" rel="noopener">exclusive talks</a> with BGH Capital, which was followed on the 7 August with the <a href="https://www.asx.com.au/asxpdf/20200807/pdf/44l8s8vg0qgjdy.pdf" target="_blank" rel="noopener">entering</a> into an Implementation Agreement, such that VRL shareholders would receive, under Structure A, up to A$2.45/share comprising A$2.20/share (A$2.10/share under Structure B) plus an additional A$0.25/share upon the re-opening of theme parks and cinemas, and Queensland's border being open to any person from NSW and Victoria. </p>
<p>At the time, I viewed the offer as being overly wrought, highly opportunistic, and heavily caveated, enabling the key shareholders to remain largely invested in the back-end; and failing that option (Structure A) - penalizing minorities via a lower cash option under Structure B.</p>
<p>Mittleman Investments agreed, and <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02291037-3A552048?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">said</a> it intends to vote its shares against both alternatives. Spheria Asset Management <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02307851-3A555222?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">chimed</a> in early this month.</p>
</div>
<div>
<h3>A Recent Timeline of Events</h3>
</div>
<div>
<div>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 93.7143px;">
<h3>Date</h3>
</td>
<td style="width: 610.286px;">
<h3>Date in the Date</h3>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">29-Aug-19</td>
<td style="width: 610.286px;">
<p>Release of  <a href="https://www.asx.com.au/asxpdf/20190829/pdf/44800hyl7gkz2s.pdf" target="_blank" rel="noopener">FY19</a>  results. VRL reported an underlying profit of A$20.6mn in against a loss of $7.3mn the previous year. The company declared a return to dividends with a fully franked dividend of A$0.05/share. At the time of these full-year results, Burke said the key issues with John had largely been addressed.</p>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">19-Dec-19</td>
<td style="width: 610.286px;">Pacific Equity Partners <a href="https://www.asx.com.au/asxpdf/20191219/pdf/44cqw7hyn865wn.pdf" target="_blank" rel="noopener">tabled</a> a non-binding Offer at A$3.90/share, a 21.9% premium to last close, by way of a Scheme. PEP has also agreed to buy a 19% stake (at $3.90/share) from VRC, which would indicate Burke and the brothers are on the same page.<br><br>
<p>This is a <a href="https://www.asx.com.au/asxpdf/20191219/pdf/44cqwl4t5yh94r.pdf" target="_blank" rel="noopener">call option</a> on 19% of shares out - or Relevant Shares - between PEP and VRC. If an alternative offer is recommended by Village's board, the call option can be exercised. Voting remains with VRC until the Relevant Shares are exercised.</p>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">23-Jan-20</td>
<td style="width: 610.286px;">VRL received a non-binding, indicative <a href="https://www.asx.com.au/asxpdf/20200124/pdf/44dh80xy1977ll.pdf" target="_blank" rel="noopener">offer</a> from BGH Capital of $4.00/share, a 25% premium to last close, and a small premium to PEP's $3.90/share offer the previous month.</td>
</tr>
<tr>
<td style="width: 93.7143px;">19-Mar-20</td>
<td style="width: 610.286px;">
<p>VRL <a href="https://www.asx.com.au/asxpdf/20200319/pdf/44g6ftp3syn8tb.pdf" target="_blank" rel="noopener">said</a> they continue to assist PEP and BGH with their respective due diligence. Exposed to cinemas and theme parks amidst the virus - VLR was down 75% from its recent high at this time.</p>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">18-May-20</td>
<td style="width: 610.286px;">
<a href="https://www.asx.com.au/asxpdf/20200518/pdf/44hx6rjz13vp2b.pdf" target="_blank" rel="noopener">Enters</a> into exclusive discussions with BGH.</td>
</tr>
<tr>
<td style="width: 93.7143px;">16-Jun - 5-Aug</td>
<td style="width: 610.286px;">Various announcements extending the exclusivity agreement with BGH</td>
</tr>
<tr>
<td style="width: 93.7143px;">7-Aug-20</td>
<td style="width: 610.286px;">
<a href="https://www.asx.com.au/asxpdf/20200807/pdf/44l8s8vg0qgjdy.pdf" target="_blank" rel="noopener">Entering</a> into an Implementation Agreement with BGH. </td>
</tr>
<tr>
<td style="width: 93.7143px;">28-Aug-20</td>
<td style="width: 610.286px;"><a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02273676-3A548632?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">FY20 results</a></td>
</tr>
<tr>
<td style="width: 93.7143px;">25-Sep-20</td>
<td style="width: 610.286px;">"<a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02285343-3A551068?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">Film Deferral Event</a>" under the Implementation Agreement - no A$0.08/share additional payment.</td>
</tr>
<tr>
<td style="width: 93.7143px;">2-Oct-20</td>
<td style="width: 610.286px;">Mittleman bumps to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02290462-3A551960?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">10.09%</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">7-Oct-20</td>
<td style="width: 610.286px;">Mittleman says it will vote <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02291037-3A552048?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">against</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">8-Oct-20</td>
<td style="width: 610.286px;">Spheria, having dipped below 5% back on xx, now has <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02292760-3A552377?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">6.20%</a>.</td>
</tr>
<tr>
<td style="width: 93.7143px;">9-Oct-20</td>
<td style="width: 610.286px;">Scheme Meeting <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02292036-3A552242?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">confirmed</a> for the 26 November</td>
</tr>
<tr>
<td style="width: 93.7143px;">12-Oct-20</td>
<td style="width: 610.286px;">Scheme Booklet <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02292758-3A552376?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">lodged</a> with ASIC and expected to be despatched on or before the 21 October, and the Scheme Meetings tentatively set for the 26 November.</td>
</tr>
<tr>
<td style="width: 93.7143px;">28-Oct-20</td>
<td style="width: 610.286px;">Spheria bumps to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02302992-3A554387?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">7.80%</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">4-Nov-20</td>
<td style="width: 610.286px;">Mittleman bumps to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02305802-3A554879?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">11.24%</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">9-Nov-20</td>
<td style="width: 610.286px;">Uplift of A$0.12/share <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02306239-3A554956?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">locked in</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">10-Nov-20</td>
<td style="width: 610.286px;">Mittleman bumps to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02308127-3A555266?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">12.87%</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">12-Nov-20</td>
<td style="width: 610.286px;">Spheria says it will vote <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02307851-3A555222?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">against</a>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">12-Nov-20</td>
<td style="width: 610.286px;">Mittleman bumps to <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02311114-3A555880?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">14.34%</a>
</td>
</tr>
</tbody>
</table>
</div>
</div>
<div>
<div style="text-align: left;" class="content-caption">Source: ASX</div>
</div>
<h3>The New News</h3>
<div></div>
<p>This morning, VRL <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02312095-3A556080?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> it had agreed with BGH that the terms are now A$3.00 under the Structure A Scheme and A$2.95/share under the Structure B Scheme, as had been rumoured last Friday. <br><br>Spheria now intends to vote in favour of both A and B. No word from Mittleman as yet.<br><br>The Scheme Meeting will now expected to be held on the 7 December, subject to Court approval.</p>
<div>
<p>More below the fold.</p>
</div>
<div>
<p></p>
</div>


On the 18 May, Aussie theme parks and movie theater operator Village Roadshow (VRL AU) entered into exclusive talks with BGH Capital, which was followed on the 7 August with the entering into an Implementation Agreement, such that VRL shareholders would receive, under Structure A, up to A$2.45/share comprising A$2.20/share (A$2.10/share under Structure B) plus an additional A$0.25/share upon the re-opening of theme parks and cinemas, and Queensland's border being open to any person from NSW and Victoria. 
At the time, I viewed the offer as being overly wrought, highly opportunistic, and heavily caveated, enabling the key shareholders to remain largely invested in the back-end; and failing that option (Structure A) - penalizing minorities via a lower cash option under Structure B.
Mittleman Investments agreed, and said it intends to vote its shares against both alternatives. Spheria Asset Management chimed in early this month.


A Recent Timeline of Events







Date


Date in the Date



29-Aug-19

Release of  FY19  results. VRL reported an underlying profit of A$20.6mn in against a loss of $7.3mn the previous year. The company declared a return to dividends with a fully franked dividend of A$0.05/share. At the time of these full-year results, Burke said the key issues with John had largely been addressed.



19-Dec-19
Pacific Equity Partners tabled a non-binding Offer at A$3.90/share, a 21.9% premium to last close, by way of a Scheme. PEP has also agreed to buy a 19% stake (at $3.90/share) from VRC, which would indicate Burke and the brothers are on the same page.  
This is a call option on 19% of shares out - or Relevant Shares - between PEP and VRC. If an alternative offer is recommended by Village's board, the call option can be exercised. Voting remains with VRC until the Relevant Shares are exercised.



23-Jan-20
VRL received a non-binding, indicative offer from BGH Capital of $4.00/share, a 25% premium to last close, and a small premium to PEP's $3.90/share offer the previous month.


19-Mar-20

VRL said they continue to assist PEP and BGH with their respective due diligence. Exposed to cinemas and theme parks amidst the virus - VLR was down 75% from its recent high at this time.



18-May-20

Enters into exclusive discussions with BGH.


16-Jun - 5-Aug
Various announcements extending the exclusivity agreement with BGH


7-Aug-20

Entering into an Implementation Agreement with BGH. 


28-Aug-20
FY20 results


25-Sep-20
"Film Deferral Event" under the Implementation Agreement - no A$0.08/share additional payment.


2-Oct-20
Mittleman bumps to 10.09%



7-Oct-20
Mittleman says it will vote against



8-Oct-20
Spheria, having dipped below 5% back on xx, now has 6.20%.


9-Oct-20
Scheme Meeting confirmed for the 26 November


12-Oct-20
Scheme Booklet lodged with ASIC and expected to be despatched on or before the 21 October, and the Scheme Meetings tentatively set for the 26 November.


28-Oct-20
Spheria bumps to 7.80%



4-Nov-20
Mittleman bumps to 11.24%



9-Nov-20
Uplift of A$0.12/share locked in



10-Nov-20
Mittleman bumps to 12.87%



12-Nov-20
Spheria says it will vote against



12-Nov-20
Mittleman bumps to 14.34%







Source: ASX

The New News

This morning, VRL announced it had agreed with BGH that the terms are now A$3.00 under the Structure A Scheme and A$2.95/share under the Structure B Scheme, as had been rumoured last Friday.   Spheria now intends to vote in favour of both A and B. No word from Mittleman as yet.  The Scheme Meeting will now expected to be held on the 7 December, subject to Court approval.

More below the fold.





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