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Spot on review.
neilsingh100 wrote:Spot on review.
Are you the owner of valuecritic.com? Excellent site!
Concerns
1) Public Offering – the company is proposing a new issue of 1,439,744 shares to the public which represents 4.31 per cent of the 33,442,944 issued capital. Given that the company seeks to list on the Small and Medium Enterprise Exchange (SME), there were concerns that the proposed public issue is too small and was in violation of the Corporation Tax Act where it states,
“the issuer must have a minimum of 25 shareholders holding at least 30% of the new shares issued by the company. These shareholders must not be associated with the Directors, Senior Officers, Connected Persons and the holders of the ten (10) largest blocks of securities issued”
To purposely subvert this, rather than offer up 30 per cent of existing shares, a new issue was created of 1,439,744 shares in addition to its current capital of 32,003,200. This new issue surpasses the 30 per cent requirement to allow for EHL to list on the SME as the law specifies "at least 30% of the new shares." Additionally, given that the initial founders and shareholders will hold 95.7 per cent of the company, they can trigger a compulsory takeover under Section 202 of the Companies Act, it gives the holder of "not less than 90 per cent of the shares" of a company the right to acquire the outstanding balance of shares
2) Shareholder Rights – In the company’s by-laws, it specifies that a person who wishes to be nominated for the election to the office (i.e. Directorships).
“is nominated by shareholders of the Company who represent in the aggregate not less than five (5) per cent of all the issued shares of the Company or five (5) per cent of all the issued shares of a class of shares of the Company, each of whom is duly qualified to be present and vote at the meeting at which the election is to take place and notice of such nomination, duly signed by the shareholders and the person being nominated, is delivered to the Company at least six (60) days before the anniversary date of the previous Annual Meeting.”
Given that only 4.31 per cent of the company is being offered, public holders of EHL shares (beyond its initial shareholders) will not be able to elect a director(s) to represent their interest.
3) Corporate Governance – In its notes EHL expressed its full commitment to the 2013 TT Corporate Governance Code. Despite the company’s expressed commitment, the current governance structure is already in violation of the code. This includes having the CEO of EHL being a member of the audit committee, the ability for the exercising of ownership rights, the lack of proposals for the tenure of a director, the degree of independence of an independent director and the nonexistent information on the remunerations of directors.
4) Dividend Policy – the company proposes to maintain a dividend policy between 15 per cent to 30 per cent of profits after taxes. Prior to 2018, dividend payouts were above 50 per cent of earnings after tax, reaching above 100 per cent in 2017. In 2018, the company paid out less than 8 per cent of earnings after taxes. The total value of these payments from its financial years 2016 to 2018 totals TT$57.8 million. The amended dividend policy is counterintuitive to its past behavior and brings into question the attractiveness of this proposed dividends structure as estimated yields based on the current offering price, is below 2.0 per cent.
Additionally, the company specified that it is seeking to raise TT$17.9 million for working capital needs. If EHL needed the working capital this also brings into question as to why dividend payouts totaled (2016-2018) in excess of TT$50 million. An assumption can be made that the windfall the shareholders received prior to 2018 was to compensate these holders given their contributions to the business and to protect their interests given the possibility of a decrease in the value of their equity interest.
5) Listing on the SME market – The SME market is designed to provide small and medium-sized enterprises the ability to raise capital within the equity market as an alternative to loan financing. A leading incentive to promote this initiative was that SME listed companies would incur a 10 per cent tax rate for the first 5 years after listing on the Trinidad and Tobago Stock Exchange.
EHL in its reasoning for its listing cited that it would use the proceeds to fund its working capital, despite the company’s average noncash working capital ratio is 2.0. It seems that the company is listing on the exchange to reduce its taxable income, as its taxation liabilities are between 8-9 times its figure in 2016. On average the company’s effective tax rate is 25.0 per cent, given this, it can be assumed that a primary driver for the listing is to reduce its taxable income. However, while income after taxes will increase, it will disproportionally benefit the shareholders who hold 95.7 per cent of the company.
6) Public Perception – EHL fixed assets exceed TT$850 million and generate revenues in excess of $70 million per annum, given its current financial standing, the offering will draw a fair amount criticism and questions will be asked whether the company can truly be called an SME. It should be noted that under the current legislation, companies with an issued share capital below TT$50 Million partly meet the litany of requirements to list on the SME exchange (EHL share capital is TT$32.2 Million).
DVSTT wrote:Anyone looked at Calypso Fund ? What are your thoughts on it?
Rockram wrote:Anyone see an issue with these calculations?
Ragnor wrote:Rockram wrote:Anyone see an issue with these calculations?
Yah, unitholders getting screwed. Why they paying a premium on the bond and shares. Rfhl shares arent worth that much anyway. The government is getting way with that bond too.
pugboy wrote:When is cif winding up and this conversion going to take place?
Still good value... JMMB analyst made some crazy assumptions. For example on large number of CIF shares the rounding would be insignificant and CIF shareholder would recover close to net asset value (NAV) of the units.pugboy wrote:In the early days the cif value was less than the rbl value and they used to say it was better to buy cif instead of rbl
But it seems to have gone the other way now
Why is jmmb issuing this info so early though
Rockram wrote:Ragnor wrote:Rockram wrote:
I Noticed in the table the writer rounded the ratio 5.09 shares UP to 6:1 CIF to RFHL shares and he mentioned the trust deed explicitly says shares will be rounded DOWN, if i am correct about this, the opposite of the assessment is true and unit holders are getting RFHL shares at a discount rather than a premium ( 5:1 ). can anyone confirm.
The JMMB analyst using 6 CIF units to 1 RBL share to determine the value when the fund is to be wound up is flawed. The ratio of RBL shares to CIF Unit is 0.196432838 (40,072,299 RBL shares/204,000,000 CIF Units). If someone has 10,000 CIF units they will get 1964 RBL shares. On wound up assuming the same share price JMMB used $122.73 the investor would get (1964 x $122.73) + (10000 x $3.46) = $275,641.72 so that is $27.56 per unit.Ragnor wrote:Rockram wrote:Ragnor wrote:Rockram wrote:
I Noticed in the table the writer rounded the ratio 5.09 shares UP to 6:1 CIF to RFHL shares and he mentioned the trust deed explicitly says shares will be rounded DOWN, if i am correct about this, the opposite of the assessment is true and unit holders are getting RFHL shares at a discount rather than a premium ( 5:1 ). can anyone confirm.
I'm interpreting this differently, while it does explicitly say that in the trust deed, there is no indication that it occurred that way. How I see it your paying 5.09 units for 1 share of RFHL. They rounded it to 6 units to 1 share. No indication of it being rounded down.
Additionally, if they made the conversion such that unitholders are getting the shares at a discount then it would have adverse effects on the share value of RFHL. I believe that RFHL did a valuation for them and this is what they determined their share value was worth based on their upcoming 2019 financials. (RFHL is immensely over valued). They would have definitely had discussions with RFHL prior to the conversion.
Also the bond is another issue, now im not familar with the issue of the bond but assuming that its trading below its par value due to the rise in interest rates, this is another indicator of the strategy they are using. Essentially they're offering less to unit holders.
neilsingh100 wrote:The JMMB analyst using 6 CIF units to 1 RBL share to determine the value when the fund is to be wound up is flawed. The ratio of RBL shares to CIF Unit is 0.196432838 (40,072,299 RBL shares/204,000,000 CIF Units). If someone has 10,000 CIF units they will get 1964 RBL shares. On wound up assuming the same share price JMMB used $122.73 the investor would get (1964 x $122.73) + (10000 x $3.46) = $275,641.72 so that is $27.56 per unit.Ragnor wrote:Rockram wrote:Ragnor wrote:Rockram wrote:
I Noticed in the table the writer rounded the ratio 5.09 shares UP to 6:1 CIF to RFHL shares and he mentioned the trust deed explicitly says shares will be rounded DOWN, if i am correct about this, the opposite of the assessment is true and unit holders are getting RFHL shares at a discount rather than a premium ( 5:1 ). can anyone confirm.
I'm interpreting this differently, while it does explicitly say that in the trust deed, there is no indication that it occurred that way. How I see it your paying 5.09 units for 1 share of RFHL. They rounded it to 6 units to 1 share. No indication of it being rounded down.
Additionally, if they made the conversion such that unitholders are getting the shares at a discount then it would have adverse effects on the share value of RFHL. I believe that RFHL did a valuation for them and this is what they determined their share value was worth based on their upcoming 2019 financials. (RFHL is immensely over valued). They would have definitely had discussions with RFHL prior to the conversion.
Also the bond is another issue, now im not familar with the issue of the bond but assuming that its trading below its par value due to the rise in interest rates, this is another indicator of the strategy they are using. Essentially they're offering less to unit holders.
Looks sopugboy wrote:So jmmb gonna own a piece of sagicor now
snatman wrote:The JMMB APO is to cover the cost of their purchase of "New Sagicor" shares.
This has been in the public domain for a few months.
It looks though, as if the price may come down to the rights issue range in the coming week or two.
I remember being laughed at here for pushing JMMB when it was trading at 45c not too long ago...
Ragnor wrote:snatman wrote:The JMMB APO is to cover the cost of their purchase of "New Sagicor" shares.
This has been in the public domain for a few months.
It looks though, as if the price may come down to the rights issue range in the coming week or two.
I remember being laughed at here for pushing JMMB when it was trading at 45c not too long ago...
Hmm, I find Barita's valuation a bit off. They essentially took the price to book value and price to earnings value, averaged them and came up with a future value of $66. However few key issues there, they didn't adjust for size (market cap), the number of companies they used to determine the average is too small of a sample and no adjustment for cashflow risk.
They would have been better to value it on dividends like how most banks should be valued or if they insist on valueing JMMBGL, use the whole market than a single sector.
Value for JMMBGL here : - https://valuecritic.com/JMMBGL/
Ragnor wrote:DVSTT wrote:Anyone looked at Calypso Fund ? What are your thoughts on it?
It depends on what you're looking for.
DVSTT wrote:Ragnor wrote:DVSTT wrote:Anyone looked at Calypso Fund ? What are your thoughts on it?
It depends on what you're looking for.
I'm honestly taking a gamble to see if its price rebounds as energy prices recover.
You buying JMMB at 1.90?pugboy wrote:I gonna put some behind them yardies
Been procrastinating too long, gonna liquidate some cif.
PariaMan wrote:You buying JMMB at 1.90?pugboy wrote:I gonna put some behind them yardies
Been procrastinating too long, gonna liquidate some cif.
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