Read the news about founder wanted to take CK Tang private on saturday. Price break away today closing at $0.66 from $0.56 last Friday.
Here is the deal :
(i) if aggregated together with the Shares held by the Offeror and the Relevant Persons, do not exceed 90 per cent. of the maximum potential issued share capital of CKT For each Offer Share: S$0.65 in cash; or
(ii)if aggregated together with the Shares held by the Offeror and the Relevant Persons, exceed 90 per cent. of the maximum potential issued share capital of CKT For each Offer Share: S$0.70 in cash. The Offeror does not intend to revise the Offer Price.
Thinking of abitrage possibilities, here are some notes and thoughts :
1) closing price last Friday was $0.56 closed today $0.66
2) Latest NTA is $0.59
3) CK Tang only became profitable in the last 2 years. For FY ended mar '06, EPS is 1.6c and PER is 35. Distrubuted 0.3c dividend For half year ended sep '06 EPS is 0.1c (0.7c in '05) Due to expenses in opening store at Vivocity.
4) Balance sheet not impressive, Robinson and Metro have a stronger financial position. Its cash flow from operations is $4.7mil in '06 and $6.3mil in '05. It has $120mil in long term loans, and mantains $4-$8mil in cash.
5) Tang Wee Sung did a similar exercise last year but was rejected by store holders. He must value it more than 70c ! Wonder what is his agenda in taking it private?
6) One bright spark, CK Tang owns the property on 310 Orchard Road. ITs used as collateral for the $120mil loan.
IF the deal does not go through, I will have to hold the stock for long term. But looking at its cashflow engine and the PER, NOT much margin for small investor like me. Sales should be good this holiday season, with more tourist arrivals and the other store @VivoCity, business may get better. I will just monitor the stock until I get more confident :D
Always think there are more people walking around than actually buying. Maybe also time to pay them a visit, read about their island cafe. Maybe that is the "casino" in CK Tang.
