atans1

Posts Tagged ‘Lion Asiapac’

Perils of buying on NTA III

In Corporate governance, Investments on 01/04/2010 at 5:20 am

Today, five companies no longer are listed after posting losses for five straight years: General Magnetics, Chuan Soon Huat Industrial, ASA Group, Fastech Synergy and Ionics EMS.

These delistings show yet again the danger of buying on NTA.

One, even if a firm has the cash for a buyout, most shareholders will not benefit. Ionics EMS’s exit offer of 1.5 cents per share, for example, was a 23.86 per cent discount to the 12-month volume-weighted average price (VWAP).

And as BT reported on tuesday, “With most of the companies experiencing drastic sell-offs since the de-listing notice was issued on March 2, their counters’ last-traded prices have fallen significantly below net asset value (NAV). General Magnetics’ case is the most vivid, with a $0.19 NAV per share against its last-traded price of $0.085.”

And as BT pointed out,  “Should VWAP feature more prominently than NAV in determining the exit offer, the price may end up being ridiculously low and shareholders of the five companies that face de-listing may find the options to stay or to go are not really options at all.”

But some gd news for value investors:  the investors in Lion Asiapac have gotten something — 15 cents a share via special dividend. Gd for them and great that they stood up and shouted for the money. And all without that self-proclaimed small shareholders’ champ.SIAS

http://atans1.wordpress.com/2010/03/18/perils-of-buying-on-nta-ii/

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