Broadway Industrial Group Ltd

[dreamybear]

Capital loss aside, I think the company is at least thoughtful enough to take the time and effort to craft an exhaustive reply to the question.

Personally, I like mgmt who are forthcoming in their engagement with shareholders, having experienced somewhat brief and replies which are baffling.

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https://links.sgx.com/FileOpen/BIGL%20-%...eID=796901
"Q : I bought the Company’s shares at S$1.17 and S$1.01 that are now trading at only S$0.12. I would like to know the Company’s strategy to help shareholders recover their outlay."

[weijian]

To recap, the mgt of BIG sold out their 43% stake to a Taiwan listed company and triggered a mandatory offer as a result. The Offerer intends to delist BIG, exercise its CA rights and does not intend to restore free float.

Prime Partners Corporate Finance who also did the Boustead Projects and Silverlake Axis valuation in recent times, was appointed as the IFA and the offer was deemed as "not fair but reasonable", indicating that the only way for BIG to be delisted was through the CA route.

In order to get to CA, it has to acquire >90% of existing share it didn't own prior to the offer, or 0.9*(1-43.09) ~ 51.2%. At the close of offer, Offerer has obtained ~50%, falling short of CA by ~1.2%. Free float has fallen to 7% and so the company has been suspended.

Since the Offerer (Patec Pte Ltd)'s parent is ultimately from Taiwan, is this going to end up as another case of Halcyon Agri?

CLOSE OF THE OFFER

Acceptances of the Offer. As at 5.30 p.m. (Singapore time) on 23 December 2024, based on information available to the Offeror, the Offeror has received valid acceptances amounting to 228,385,328 Shares, representing approximately 49.96% of the total number of Shares

Shares held as at the Offer Announcement Date. As at the Offer Announcement Date, the Offeror and persons acting in concert with it collectively owned, controlled or agreed to acquire 196,964,849 Shares, representing 43.09% of total number of Shares

Accordingly, as at 5.30 p.m. (Singapore time) on 23 December 2024, the total number of (a) Shares owned, controlled or agreed to be acquired by the Offeror and persons acting in concert with it; and (b) valid acceptances of the Offer, amount to an aggregate of 425,350,177 Shares, representing approximately 93.05% of the total number of Shares.

Close of offer: https://links.sgx.com/FileOpen/Close_of_...eID=828734
IFA opinion: https://links.sgx.com/FileOpen/BIGL%20-%...eID=826035

[opmi]

i thought Patec is Singaporean company listed in TW?

https://patec-intl.com/

[weijian]

i thought Patec is Singaporean company listed in TW?

https://patec-intl.com/

hi opmi,

Thanks for correcting my mistake. I had erroneously assumed that the parent holding company would be incorporated in Taiwan since it is listed on the Taiwan Stock Exchange, with the Offerer been a subsidiary.

The current Offerer has not extended the closing date but IIRC, OPMIs (not referring to you) still have 3 months to send in their acceptances. So let's see what transpires further down the road.

[weijian]

The remaining 3.78% of BIG minorities who held out against the previous "not fair but reasonable" offer have received an exit offer from the new controlling shareholder (Patec Pte Ltd). For a year of illiquidity (and lack of final dividend for FY24), OPMIs have a potential 33% gain if this exit offer through a selective capital reduction goes through.

EXIT OFFER BY THE COMPANY BY WAY OF A PROPOSED SELECTIVE CAPITAL REDUCTION AND PROPOSED DELISTING OF THE COMPANY

The Selective Capital Reduction shall serve as a fair and reasonable exit offer to the Eligible Shareholders (the “Exit Offer”) for the purpose of the delisting of the Company under Rules 1307 and 1309 of the Listing Manual.

Accordingly, the Company proposes to cancel all of the 17,265,407 Shares held by the Eligible Shareholders in consideration for S$0.262 (the “Exit Offer Price”) in cash per Share by way of the Selective Capital Reduction. If the Selective Capital Reduction is effected, an aggregate sum of approximately S$4,523,537 will be returned to the Eligible Shareholders in cash (the “Aggregate Cash Distribution”), on the basis of the Exit Offer Price for each Share held by each Eligible Shareholder that is cancelled as a result of the Selective Capital Reduction.

https://links.sgx.com/FileOpen/BIGL%20-%...eID=869111

P.S. Previous IFA PRIMEPARTNERS CORPORATE FINANCE indicated a range of values between S$0.266 and S$0.291, and the current exit offer of S$0.262 is curiously just below the lower limit of this range.

[opmi]

if invested the first offer proceeds into BIL top 2 customers STX or WDC, 4-5x returns....hahah....

[weijian]

if invested the first offer proceeds into BIL top 2 customers STX or WDC, 4-5x returns....hahah....

hi opmi,

The "33% gain for OPMIs who did not accept the offer" is in the context of merger arbitrage, especially with respect to Spore takeover rules.

I do agree with you that in general, it is better to invest in the principals (brand/IP owner) than the OEM/contract manufacturer. For example, to quote the locally listed examples, it is probably better to be vested in AMAT/LAM (UMC), ASML (Frencken) or Intel (AEM) than their sub-contractors in brackets.

But of course, there are exceptions and one of the exceptions that pop up straight in my mind is the OEMs for the aircraft parts compared to their customers (the airlines).