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Full Version: Radiance RTO: Raw Deal (Investor Beware)
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I have attached the following article from THL - i think she is doing a very good job in first educating the investing public and secondly expose bullies of minority shareholders.

Looking through the details listed in the article below, you can't help but feel that GIHL Angry is ALL-OUT to Suck Radiance DRY with this take-over.

I hope minority shareholders to turn-out in force to vote down this bully RTO. This is so that we can make this case an example so as not to see local investors as push-overs !!


Raw deal for Radiance minority shareholders

RADIANCE Group is proposing a reverse takeover of its majority shareholder, but it's a deal that minority shareholders may not want.

Last year, UK-based Global Invacom Holdings Ltd (GIHL) bought a 52.4 per cent stake in Radiance for S$10.53 million cash. Just about a year later, and after chalking up a loss of US$5.9 million (S$7.2 million), it is proposing that the Singapore-listed company gobble it up for a price of US$18.5 million cash and a 65 per cent stake in the enlarged share capital of Radiance.

In other words, GIHL, which put S$10.53 million cash into thinly traded Radiance a year ago, could get back S$22.5 million in cash and an even larger stake in Radiance.

On June 30, Radiance announced that it had entered into a conditional sale-and-purchase agreement to buy up all the shares of GIHL, described as 'one of the largest suppliers of satellite and television peripherals in the world'. The consideration for the purchase is US$49 million - US$18.5 million in cash and US$30.5 million in shares. That's 5.7 times its net asset value.

In comparison, Radiance's market capitalisation is all of S$20 million. Based on that, the Singapore electronics manufacturing services provider is valued at a deep 50 per cent discount to its net asset value.

Looking at the figures, it's not as if Radiance is a loss-making company and GIHL is raking in the big bucks.

And it is not as if Radiance is a loss-making company and GIHL is raking in the big bucks.

Last year, Radiance chalked up S$5.8 million net earnings, up 433 per cent from the year before. GIHL, meanwhile, was in the red by S$8 million, which it blamed on a one-off cost of S$11.7 million relating to the 'transfer of shares from its operating subsidiary Global Invacom Ltd to The Pacific Trust'. Without this cost, GIHL said its net earnings for FY2010 amounted to S$3.7 million, down from S$8.2 million in 2009.

Taking that profit figure, Radiance is paying 18 times for GIHL's earnings, while it itself is valued at just four times. In terms of price-to-sales, Radiance is trading at 0.23 times, compared with the 0.92 times it is proposing to pay for GIHL.

Well, such valuations might have been justifiable if the company were growing and gaining market share. But from the financial numbers provided, it doesn't look like GIHL is thriving.

Its revenue fell from S$83 million in 2008 to S$73 million in 2010. In contrast, Radiance's revenue rose to S$85 million last year from S$79 million in 2008.

These numbers seem at odds with the claim that 'the proposed acquisition allows the company (Radiance) to invest in a growing business'. GIHL lays claim to being 'one of the largest suppliers of satellites and television peripherals in the world', but it has average sales of only S$84 million a year in the past three years.

Post-acquisition, the financial numbers of Radiance would look worse than before. For one thing, its S$29 million cash at the end of last year would be all but depleted after the cash payment of US$18.5 million or S$22.5 million to GIHL shareholders.

Its earnings per share - after the four-into-one share consolidation - would halve to 4.4 cents from 8.8 cents. Its net tangible asset per share, meanwhile, would fall from 58 cents to 13.4 cents.

So, all in all, it doesn't look like the minority shareholders of Radiance are in on a great deal, and they might want to let their disapproval be known when the proposal is put to a vote soon.