Readers will recall that in 2005 Webb-site.com urged shareholders to reject what we regarded as a low-ball offer by Nam Tai Electronics Inc. (NYSE: NTE) to privatise Nam Tai Electronic & Electrical Products Ltd (NTEEP, 2633) at $1.80 per share. They did. More recently, NTEEP announced on 14-Apr-07 that it had sold all of its holding in Shenzhen-listed TCL Corp for US$54.0m (before commission, expenses and tax), adding to the cash pile of US$77.5m at 31-Mar-07, when NTEEP had borrowings of only US$2m, from NTE. So the total net cash is about US$129.5m, or about HK$1.15 per NTEEP share. Starting on 10-May-07 when its holding was 70.31%, NTE has been buying up shares in NTEEP, and by 14-May-07 it had increased its holding to 73.06%. Directors of the company hold a total of 1.96%, and are not regarded as members of the public, so that takes the total over 75.02% and reduces the free float to less than 25%, putting NTEEP into breach of Listing Rule 8.08. This was followed by more purchases over the next 3 days, so that by Friday 18-May-07, NTE's stake had risen to 75.81%, which, combined with directors, gives a stake of 77.77% and reduces the free float to just 22.23%. There may have been further purchases in the last 2 days which have not yet been disclosed. The stock closed tonight at $2.00. Is NTE/NTEEP now going to just ignore the Listing Rules, or will NTE be forced to sell down the holding? If NTE wants to make another privatisation bid, they should do so under the Takeover Code, after restoring the free float to 25%.
Update, 28-May-07: Subsequent
disclosures published tonight show that NTE did indeed increase its
holding further on 21-May and 22-May, to 76.49%. Together with the
directors, the combined shareholding is 78.45%, reducing the free float to
21.55%.
Copyright Webb-site.com, 2007 Sign up for our free newsletter Recommend Webb-site.com to a friend Important notice: All material on this site, except where otherwise accredited, is copyright to Webb-site.com. Media and researchers are welcome to quote from articles on this site, provided that such quotation is attributed to Webb-site.com. The information in this site should not be relied upon by any person in making any investment decision. No responsibility or liability is accepted by Webb-site.com or any person related to it for any loss arising from or in reliance upon the whole or any part of the contents of this site. Persons who are in any doubt about an investment or potential investment should take professional investment advice. From time to time parties associated with Webb-site.com may own long or short positions in securities issued by or related to companies or governments on which we comment. |