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Accordia Golf Trust: $0.732 offer.

Monday, June 29, 2020

Finally, we have news.

"... sponsor of Accordia Golf Trust (AGT) has proposed to acquire the trust's 88 golf courses in Japan for S$804.1 million, or an implied purchase consideration of S$0.732 per unit, it said on Monday."

What do I think?

Too low!

Why do I say so?

If you are new to my blog or if you cannot remember, read the following blogs:

1. Offer must be way above valuation.

2. Accordia Golf Trust: Reasonable or realistic price?





Basically, I think that an offer price of $0.732 a unit undervalues Accordia Golf Trust by a lot.

Long time readers know that I invest in Accordia Golf Trust mainly for income.

Having said this, my belief that Mr. Market does not fully appreciate Accordia Golf Trust's value only became stronger in the last couple of years.

There is definitely evidence of undervaluation. 

I have shared some thoughts towards this in some of my past blogs.

It isn't a secret that I have a soft spot for what I believe to be undervalued investments which pay dividends while I wait for their value to be possibly unlocked.

That was the case with Saizen REIT.

It was also the case with Croesus Retail Trust.

What about Accordia Golf Trust?

Accordia Golf Trust is a good fit too.






I increased my investment in Accordia Golf Trust significantly in 2018 and 2019 so that my position crossed the $200,000 mark in market value.

See:
3Q 2018 passive income: AGT.

and

Largest investments updated (4Q 2019).

That was after substantially reducing my investment in 2017 at $0.70 a unit.

To understand why I did that, see:
Reducing investment in Accordia Golf Trust.







Looking at my records, I see purchase prices of 49c to 54c in 2018 and purchase prices of 51c to 53c in 2019 as I substantially increased my stake.

The records are all hand written, of course.

Feeling a bit sentimental.

At $0.73 a unit, the market value of my investment in Accordia Golf Trust would cross the $300,000 mark easily.

Been receiving nice passive income from Accordia Golf Trust.

This might end soon, it now seems.

Even though some of that $0.732 a unit would likely go towards costs and some of it might be retained at the Trust level as Accordia Golf Trust is not being delisted, receiving approximately $0.70 a unit would still give me a pretty nice capital gain.

When I take into consideration the dividends received in the past, my investment in Accordia Golf Trust has turned out pretty well.





Having said this, honestly, I am perfectly OK with holding on to my investment and to continue receiving passive income especially because I think an offer of $0.732 a unit is really too low.

I am pretty disappointed and even disgusted.

Well, I guess there is really no point in being upset about this.

Could have been worse, I suppose.

It is what it is.

For what it is worth, having a lot more cash in my bank account is a rather comforting thought.

Well, for a while anyway.

Have to try to look at the bright side of things a bit more, especially during these trying times.






Reference:
The Business Times

29 comments:

laurence said...

We need our AK the Oracle to save us from these devouring beasts!!!!!
Help us AK71. You're our only hope!!!!
;)

AK71 said...

Hi Laurence,

Star Wars fan spotted.

Unfortunately, I am not Obi-wan Kenobi.

Well, may the Force be with us. ;p

Capricon said...

Hi
Hope the largest minority shareholder, Hibiki can push them a bit, though unlikely.

https://www.businesstimes.com.sg/companies-markets/accordia-golf-trust-offered-s8041m-by-sponsor-to-divest-all-its-japan-golf-courses?utm_source=emarsys&utm_medium=email&utm_campaign=BT_Newsletter_Debrief&utm_term=Accordia+Golf+Trust+offered+S%24804.1m+by+sponsor+to+divest+all+its+Japan+golf+courses+&utm_content=29%2F06%2F2020

Cheers

AK71 said...

Hi Capricon,

Hibiki's investment in Accordia Golf Trust was made at a very low price.

If I remember correctly, it was in the low 40+ cents a unit.

Although I hope they will make some noise or do more in reaction to the rather low offer price, I am not holding my breath. ;)

kehyi said...

I believe the intention is to delist AGT

https://www.businesstimes.com.sg/companies-markets/accordia-golf-trust-offered-s8041m-by-sponsor-to-divest-all-its-japan-golf-courses
"It will not be meaningful for AGT to maintain its listing on the Singapore Exchange (SGX) after the asset sale, the trustee-manager noted, as AGT will cease to have any operating business and will be deemed to be a cash trust.

The trustee-manager thus intends to undertake a voluntary winding up of AGT."

AK71 said...

Hi kehyi,

I meant that AGT would end up like Saizen REIT and RHT which remained listed after selling all their assets.

They would later delist but while they remain listed, they would retain some value.

This value would only be distributed to investors upon delisting at a later date.

I wasn't clear on this in the blog.

So, thanks for the poke. :)

Unknown said...

Hi AK,

After factoring winding up expenses, i think the theoretical price should be ($0.732 X 97 %) + $0.013 (JPY 1.2billion special distribution)?

Singapore Dividend Collector said...

Hi ak

2 questions:

What will happen to existing unitholders if Accordia delists? Do you think this is a time to celebrate for existing unitholders?

Thanks

SDC

AK71 said...

Hi Unknown,

I am not sure if it is going to be worth that much because the whole exercise will have costs which AGT must bear.

Will just have to wait and see.

AK71 said...

Hi Singapore Dividend Collector,

I cannot speak for all investors of AGT, of course.

Although I think that the offer price is too low, it isn't a bad outcome for me.

bunny said...

AK shifu, do we get to vote? I'm clueless and holding on only small small share but thought the dividend payout is good and the offer is like low.

AK71 said...

Hi bunny,

We should expect an EGM where we would be asked to vote on the offer. :)

laurence said...

Hibiki has made it's stand clear.
Will AK the Oracle also Vote No?

On 29th June 2020, AGTM has published the press release to recommend to unitholders’ the divestment of all of its golf courses to Parent company at an indicative consideration per unit of 0.732. We would like to publicly announce that we are disappointed with this price which is unarguably low based on our understanding. We are hoping that all independent unitholders agree that this price does not provide "reasonable" premium to fully take over a publicly traded entity generating a significantly attractive cashflow. We will be voting against the proposed divestment in the case the price is not revised higher. As the leading minority unitholder, we are also open for constructive negotiation with the bidder.

https://www.businesswire.com/news/home/20200703005012/en/Hibiki-Path-Advisors-Proposed-Divestment-Accordia-Golf

Roaming fighter said...

Hi Ak,
Hibiki will vote against the offer.
https://www.businesstimes.com.sg/companies-markets/hibiki-fund-says-will-vote-against-accordia-golf-trust-divestment-unless-price-is

john said...

https://www.businesswire.com/news/home/20200703005012/en/Hibiki-Path-Advisors-Proposed-Divestment-Accordia-Golf

desmondsph said...

Read full article here>> https://www.businesswire.com/news/home/20200703005012/en/Hibiki-Path-Advisors-Proposed-Divestment-Accordia-Golf

HIBIKI PATH ADVISORS ON PROPOSED DIVESTMENT OF ACCORDIA GOLF TRUST

We, Hibiki Path Advisors Pte. Ltd. (“Hibiki”) manages and/or advises certain entities with aggregate holding of 7.6% of Accordia Golf Trust (“AGT”) shares as of 30th Jun, 2020. As one of the minority non-conflicted unitholders of AGT, Hibiki is currently actively engaging the trustee manager of AGT, Accordia Golf Trust Management (“AGTM”).

On 29th June 2020, AGTM has published the press release to recommend to unitholders’ the divestment of all of its golf courses to Parent company at an indicative consideration per unit of 0.732. We would like to publicly announce that we are disappointed with this price which is unarguably low based on our understanding. We are hoping that all independent unitholders agree that this price does not provide "reasonable" premium to fully take over a publicly traded entity generating a significantly attractive cashflow. We will be voting against the proposed divestment in the case the price is not revised higher. As the leading minority unitholder, we are also open for constructive negotiation with the bidder.

We would like to share our thoughts on the following four key areas of concerns to justify our decision to vote against the indicative price of 0.732 which we hope all unitholders will also review in their own discretion. We also wish that AGTM can address the concerns mentioned below for us to reconsider on our position as well as to act in the best interest of unitholders to further negotiate with the bidder to pay a reasonable premium over the current indicative offer.

We hope AGTM will publicly respond to the queries we have mentioned above as we believe these are material information required by the unitholders to make the best decision on the proposed divestment. Without these information and a substantial increase for the indicative price, we will have to vote against the proposed divestment.

Should the proposed divestment be voted down, we are happy to continue as an engaging and constructive long-term unitholder for AGT. We are confident on the superior operating wisdom of AGT as the leading golf course operator in Japan which was proven through the recent Covid-19 pandemic. We look forward to continue maximizing the long-term unitholder value together with fellow unitholders and with all the interested parties including the parent company.

desmondsph said...

Will AK vote at the EGM?

AK71 said...

Hi Laurence, Roaming Fighter, John and Desmond,

This is a very nice surprise.

I had thought that Hibiki with their very low purchase price might accept the offer.

If Hibiki is unhappy with the offer and is voting against it, there is a chance we might get a better offer.

In such a case, if the offer price does not get revised higher, if I go to the EGM, I will say "NO" too. ;)

desmondsph said...

https://links.sgx.com/1.0.0/corporate-announcements/09A7YOV3EBY68OZX/2d2f1d92a45f8c5c0b6323f0236fdca71a0836b5887b578a8b588d4922481665

The board of directors (the “Board”) of Accordia Golf Trust Management Pte. Ltd., as trustee-manager
of Accordia Golf Trust (“AGT” or the “Trust”, and the trustee-manager of AGT, the “Trustee-Manager”)
refers to the press release (“Press Release”) published by Business Wire dated 3 July 2020 titled
“Hibiki Path Advisors on Proposed Divestment of Accordia Golf Trust” from Hibiki Path Advisors Pte.
Ltd. (“Hibiki”), one of the unitholders of AGT (“Unitholders”), in relation to the proposed divestment of
AGT’s interests in all of its Golf Courses (the “Proposed Divestment”) to Accordia Golf Co., Ltd.
(“Accordia Golf”). The Proposed Divestment was announced by the Trustee-Manager on 29 June
2020 (the “Proposed Divestment Announcement”).
Unless otherwise defined, all capitalised terms used in this Announcement shall bear the same
meaning as in the Proposed Divestment Announcement.
As set out in the Proposed Divestment Announcement, the Proposed Divestment is conditional upon,
among others, approval from Unitholders at an EGM of AGT to be convened by 14 September 2020
(or such other date as may be agreed between the Trustee-Manager and Accordia Golf), and a
Circular will be despatched or issued to Unitholders for the purpose of seeking Unitholders’ approval
for the Proposed Divestment in due course.
The Trustee-Manager recognises and respects that it is the prerogative of all independent Unitholders
to vote on the Proposed Divestment as they deem fit. However, the Trustee-Manager wishes to advise
Unitholders to carefully review the Circular in its entirety when it is despatched or issued before making
a decision on how they will vote on the Proposed Divestment. The Circular will contain, among others,
(a) the recommendation of the Independent Committee on the Proposed Divestment, (b) the opinion of
the IFA to the Independent Directors and the Audit and Risk Committee of the Trustee-Manager, (c)
the recommendation of the Joint Financial Advisers to the Independent Committee, and (d) the
valuation summary letter/reports on the TK Interests and Golf Courses. In preparing the Circular, the
Trustee-Manager will take into consideration (where appropriate) the queries and comments received
on the Proposed Divestment.

desmondsph said...

AGT ask Hibiki go fly kite

AK71 said...

Hi desmondsph,

Well, to their credit, at least they tried. :)

I don't enjoy kite flying.

I wonder if Hibiki feels the same.

laurence said...

A video presentation by Hibiki Path Advisors detailing their case against Accordia Golf Trust's Manager:

https://www.youtube.com/watch?v=9GzRD7iI-FA&feature=youtu.be

laurence said...

At the end of Hibiki's presentation, it stated that it is already in contact with SGX RegCo and SIAS to address all it's concerns.

All retail shareholders must also unite to show AGTM (and all others after them) that retail investors in SG are no pushovers and will not be hoodwinked by unscrupulous managements.

desmondsph said...

https://www.youtube.com/watch?v=9GzRD7iI-FA&feature=youtu.be

Hibiki Video Presentation on Accordia Golf Trust dated 9th July

AK71 said...

Hi Laurence and desmondsph,

Thanks for sharing the video link.

Hibiki is tenacious!

I hope that something good will come out of this. :)

laurence said...

Many forumers have been calling for retail investors to join forces with Hibiki by combining their "NO" votes with Hibiki's to increase the latter's voting power and also to encourage Hibiki to initiate a motion to remove the AGT Management just like what happened with Sabana in 2017.

What's your take, our exalted High Oracle?

AK71 said...

Hi Laurence,

It is early days yet but I am OK with whichever way this goes.

Of course, I am very interested to see how Hibiki will bring this forward.

laurence said...

New news!!!
Not sure what it means to us though. :(

https://pulsenews.co.kr/view.php?year=2020&no=719771

AK71 said...

Hi Laurence,

It looks to me like old news but a confused version. ;p

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