Neratel

[KopiKat]

Are there any probable reasons to cut dividends?

I just wonder what ways can the new parent company milk Neratel?

Let's look at their Intent from their Offer doc,

5.2 Offeror's Intentions for the Company

Following the close of the Offer, the Offeror intends to undertake a strategic and operational review of the organisation, businesses and operations of the Group, and to evaluate various strategic options. It is currently the intention of the Offeror to ensure continuity in the
operations of the Group and to steer the Group to further growth and development.

Save as disclosed above, the Offeror has no present intention to (a) make any major changes to the existing business of the Company, (b) redeploy the fixed assets of the Company, or ( c) discontinue the employment of the employees of the Group. Nonetheless, the Offeror retains the flexibility at any time to consider any options or opportunities which may present themselves, and which the Offeror regards to be in the interests of the Offeror and/or the Group.

The Offeror nonetheless intends to be a long term investor in the Group and does not intend to divest, sell or dispose of the Shares which it acquires pursuant to the Acquisition in the six (6) months following the close or lapse of the Offer.

Sounds like in the short term, there'll be no major changes. But, they also cover themselves with the sentence I highlighted in red.

So, most likely, if the part in red is not activated, then,

1. Replace Eltek Directors with their own people
2. Replace 'unfriendly' IDs eg. those who recommended 'REJECT OFFER'
3. Replace CEO (if not co-operative)

They may also freeze dividend payout, pending the completion of their 'strategic review'. They could also justify that by saying they may need to conserve the cash for biz expansion / diversification (they could also sell / swop some of their other assets to Neratel)....


PS. I have ever invested in a Malaysia company cos' one of their core asset was in banking. Along the way, the banking assets were divested and they acquire a newspaper asset and subsequently, I forgot what it morphed into. Somehow, the share price just kept dropping... I was very new to investing then and didn't know what was happening. But, I learnt a good lesson...

So, ya, I'll be watching closely to see what's their real intention and will definitely act swiftly if need be....