King Wan Corporation

[desmondxyz]

Kingwan's current share price should have priced in the high expectation of the $50mil windfall from KTIS listing. If it doesn't get listed, its will likely suffer more than just a dip. Its dividend payout will lend some support to its price but not much. Any premium built into its current price will be removed if KTIS listing went haywire.

The last date for this to take place will be 15 Aug this year. I expect a big slide in confidence if KTI still cannot get listed by late July to early Aug.

KingWan's M&E business is still doing fine but those two Thai businesses contributed half of KingWan's profit before they were disposed of. It actually made KingWan quite risky now. Its PE is about 4 before this event. Since this event, profit has halved so PE doubled. Then price went up in anticipation and so PE raised further. PE is now ~14.

No sure how their property venture is turning out but it doesn't seems to have contributed strongly to its bottomline, if any.

Not a call to buy or sell. DYDD.

(Vested)

http://infopub.sgx.com/FileOpen/KWCAnnou...leID=36915

5. PUT AND CALL OPTIONS
5.1 KTIS, the Company and the Subsidiary have agreed to grant to each other the options described below in paragraphs 5.2 and 5.3, if the Consideration Shares are not issued and allotted to the Company and/or the Subsidiary within twelve (12) months from the Completion Date (or such other period as the parties may mutually agree in writing) (‘Expiry Event’).

5.2 KTIS grants each of the Company and the Subsidiary the option to require KTIS to sell and transfer all (but not some only) of the EPPCO Shares and EPC Shares (collectively the ‘Option Shares’), on the exercise of which KTIS shall become bound to transfer all of the Option Shares at the price equivalent to the Cash Consideration (‘Option Price’) in accordance with the EPPCO Agreement and EPC Agreement.

5.3 Each of the Company and the Subsidiary grants KTIS the option to require the Company and the Subsidiary to purchase the Option Shares at the Option Price, on the exercise of which the Company and the Subsidiary will become bound to acquire all of the EPPCO Shares and EPC Shares respectively in accordance with the EPPCO Agreement and EPC Agreement.

5.4 The Option is exercisable by the service of a written notice (an ‘Option Notice’) by KTIS or (as the case may be) the Company and the Subsidiary within three (3) months after the occurrence of the Expiry Event (the ‘Option Period’).

5.5 If applicable, KTIS shall pay each of the Company and the Subsidiary such amount as may be necessary to put each of the Company and the Subsidiary into the financial position it would have been in if the sale of the EPPCO Shares and EPC Shares did not occur. Such amount shall include, but is not limited to:
(a) any dividends that may have been paid by EPPCO and/or EPC to KTIS from the Completion Date; and
(b) any diminution in the financial position of EPPCO and EPC arising from such restructuring exercise carried on by KTIS after the Completion Date.

Can somebody help me to understand this put and call option?

5.2 and 5.3) Does it mean that if KTIS ipo not happen, Kingwan will get back its 20% share in EPPCO and EPC, but need to pay back the 5% cash that KTIS already paid to Kingwan upon completion of sale?

5.5) If the deal is off, KTIS needs to pay back all the dividends owed to Kingwan within the IPO pending period?

After that, everything back to square, Kingwan continues to hold the thai investment and receive dividend as usual?


(Vested)