The latest announcement by CM Pac is significant coming hot the heels of a above expected set of final results for 2013 and dividend payout. I think we are on the verge of witnessing an inflexion point for CM Pac and the share price. With share price once again nearing book value of S$0.9765, it appears that CM Group is stepping up its gear to sustain the momentum of CM Pac as the parent group's flagship for a pan-China toll road play as oppose to provincial based toll road 'H' shares listed on HKSE.
The parent group's commitment to the potential transformation is underpinned by the right of first refusal granted to CM Pac. The addition of 2 extra independent directors is also indicative of the corporate governance expected of an expanding group.
Akan Datang
Vested
GG
1.2 Rationale. The Restructuring forms part of the strategic direction of the Company, Huajian, CMG and Easton (collectively, the “China Merchants Group”) to use the Company as the platform for the China Merchants Group to expand its toll road business and presence in the
People’s Republic of China. The aim of the Restructuring is to streamline and optimize the human resources of both Huajian and the Company in order to focus on the growth of the Company’s business.
2.3 Independent directors. Pursuant to the recommendations of Guideline 2.2 of the Code of Corporate Governance 2012, in view of the concurrent appointment of Mr Luo Hui Lai as the Executive Chairman and Chief Executive Officer of the Company, the Company intends to appoint two additional independent directors as soon as practicable such that the independent directors of the Company will make up at least half of the Board. The Company is in the process of shortlisting and assessing suitable candidates to be appointed as the two additional independent directors and will make an appropriate announcement when the appointments have been finalized and effected.
6. RIGHT OF FIRST REFUSAL
As part of the Restructuring, in line with the China Merchants Group’s commitment to use the Company as the platform for the China Merchants Group to expand its toll road business and presence in the People’s Republic of China, Huajian has also undertaken to the Company that, in the event that:
(i) Huajian intends to acquire an interest in, or has access to, any opportunity to acquire an interest of any kind in the business of holding concession(s) for, or for developing, building, owning or operating, toll roads (a “Business Opportunity”); and/or
(ii) Huajian intends to dispose of an interest of any kind in the business of holding concession(s) for, or for developing, building, owning or operating, toll roads (a “Business Disposal”), then the Company shall have a right of first refusal to participate in such Business Opportunity or Business Disposal.
(04-03-2014, 07:44 PM)Nick Wrote: [ -> ]ORGANISATIONAL RESTRUCTURING
http://infopub.sgx.com/FileOpen/Organisa...eID=277559
1) The Senior Managers from the Parent Company (CM Huajian) are taking executive control of CM Pacific. The current non-executive Chairman (who is the MD of the Parent) will be the new Executive Chairman and CEO.
2) CMG intend to use CM Pacific as "the platform for the China Merchants Group to expand its toll road business and presence in the People’s Republic of China".
3) Formalize ROFR for business opportunities or disposals by the Parent.
4) 2 more Independent Directors will be appointed to ensure half of the board is independent.
Thoughts:
Much have been speculated here about CM Pacific becoming a major pan-China toll road player and hence the need to reduce the discount to the NAV ce so that new equity could be raised to acquire toll roads rapidly. The announcement does seem to lend some credence to this speculative eventuality. Even if this speculation is incorrect, the Company do have significant debt capacity to acquire toll roads or BOT projects in the future if deem to be accretive. I do like the organic growth + potential for inorganic expansion angle in this investment.
CM Pacific closed at 97.0 translating to a dividend yield of 7.2%.
(Vested)