Attempt to Delist E&E Blocked

Read announcement:
JOINT ANNOUNCEMENT - PROPOSED VOLUNTARY DELISTING OF ELEC & ELTEK INTERNATIONAL COMPANY LIMITED - THE SGX-ST’S DECISION ON THE DELISTING PROPOSAL & WITHDRAWAL OF EXIT OFFER

If you are too lazy, here's the essence:

SGX-ST rejected E&E delisting application because the terms of the offer are neither fair nor reasonable under current market conditions.

Thanks to the independent financial adviser, DMG & Partner Securities Pte Ltd.

As such, Kingboard Chemical withdraws the exit offer.


Side note 1:
Due to the pending proposal on delisting, interim dividend was not declared although results are good. It will definitely be a good investor relations act if the Board recommends a higher special dividend to compensate the interim dividend missed.

Side note 2:
Stock price of E&E went up to US$1.46 in early August. People could have come to know about the IFA's recommendation to SGX before the announcement. I am not complaining, I think the current price is still good for long term accumulation if dividend payment continues to be generous.

Side note 3:
The attempt by Kingboard Laminates to delist Kingboard Copper Foil did not go through as well. The majority required to vote in favour of the delisting was not obtained.


My personal take on the delisting saga:
As a minority shareholder of E&E, Cheung's attempts to delist Kingboard Copper Foil and E&E reminded me of a Chinese idiom, 趁火打劫 (literally translated: robbing when there's a fire). Even though I am unhappy with the proposal, I applaud Cheung's shrewdness. I am happy that my company is in good hands.

In my opinion, the most critical reasons for the failures is the faster than expected market recovery and the low offer prices. If the market volatility and uncertainty had lasted longer, both proposals might have been approved due to prevailing extreme fear. The deals would have been more desirable, or even irresistable and "market-proof", had the offer terms been more generous (say, somewhere closer to the NAV). By offering a fairer exit price, the deal would come across as more sincere and less of an exploitation which creates grievances among minority shareholders.

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E&E Basic Share Data
Share price as at 21 Aug 2009: US$1.35
12-month price range: US$0.810 - US$1.67
Market cap as at 21 Aug 2009: US$242.4
P/E (historical): 5.7
P/B (as at 30 June 09): 0.7

Financial year-end: 31 Dec
Reuters code: EELT.SP
Bloomberg code: ELEC:SP

Major shareholders (as at 24 March 2009):
Cheung Kwok Wing : 71.71%
Value Partners Limited: 8.98%
Estimated free float : 19.31% (ie. US$46.8m or S$67.3m @S$1.4382/US$)