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OCN is sufficiently interested to have RNS'd the Edison report.
Piedro commented 'If you check back I think you will find that Edison makes a report every 6 months
or so, all of which get RNS'ed'
Thanks for the prompt.
It looks to have been
June 2021
May 2022
Sept 2022
Oct 2022 (released Nov 2022)
Feb 2024
GLA
Thanks for this link. It reads like part of a 'defence document' (timing?), doesn't it ?
Not just your quote ( cf my earlier ' SWF asset stripper' speculation) , but also this :
.."In Exhibit 1 we attempt to value OCN. Firstly, we took the last published equity value (30 June 2023), excluding minorities, of OCN of US$565.2m, or £444.1m. Secondly, we subtracted the equity value at the same date of OCN’s 57% stake in PORT3 of £206.2m, leaving an equity value of OCN (ex PORT3) of £237.9m. Finally, we added back the current market value of OCN’s 57% stake in PORT3 and arrived at a market value of OCN of £906.7m (or 2,564p/share) against a current market capitalisation of £443.8m (1,255p/share). This implies that OCN trades at a 51.1% discount to its market price value despite the bounce in the share price this year, from a low of 820p on 9 June to the current level. This calculation does not include any potential increase in the value of the investment portfolio since the last published date of 30 June, nor any additional profit accrued from its holding in PORT3 since that date..."
Followed by 'bid premium' reference :
.."PORT3 is trading on a 2023 EV/EBITDA multiple of c 10.0x, which is close to the average multiple of a group of international peers (FY23 average of 10.5x) and so we consider this to be relatively conservative given the M&A upside of this particular asset at the moment and the significant growth that PORT3 has demonstrated throughout 2023. For reference, we estimate that each 0.5x of EV/EBITDA ratio added raises the total value of OCN by £44.3m or 125p/share..."
GLA
One v interesting para in today’s Edison report, who are paid by OCN, to add to the mix: ‘Another way to highlight OCN’s value (based on the same figures) is to look at the current value of OCN’s 57% stake in PORT3 (£668.8m) and compare it to the current value of OCN (£443.8m). In effect, investors would get a controlling stake in PORT3 at a one-third discount and would receive the rest of OCN’s assets for free.’
.."their total holding would drop below 50% of the A shares.
OCN would have the cash to buy Hansa, but that would definitely fall under the category of invested interest when it comes to the 2 family's & so they wouldn't be in a position to vote on whether to approve such an offer & I'm sure the rest of us would vote to reject such a move & would be asking the directors to step down for wasting our time & money...."
All very complicated....
And from Last of the Mohicans
.."Personally if Wilson & Sons is sold, I don't see a merger between OCN & Hansa Trust happening.
Its fraught with complexity.
Hansa has 2 different types of shares in issue the voting ones & non-voting ones. The 2 family's control enough of the voting ones to keep control of it. However they don't have a majority ownership of the non-voting ones (There are a total of 40M voting & 80M non voting)
At OCN they own just over 51% of it with half of that ownership coming in the form of Hansa.
Who would make the offer for the other?
It would needs to be priced at a price that the independent directors could justify it as being in the best interests of shareholders to accept (both companies).
Hansa NAV currently sits at £427M but the shares trade at a discount of over 40% currently to that valuation & they still don't carryout buy-backs of the A shares which they have the authority to do.
Over 27% of that value comes from the OCN holding meaning the rest of the Hansa portfolio is worth £300M max & the OCN % will have increased since the end of Dec to possibly 30% or more now.
OCN has a market value of £495M currently for the 35.36M shares in issue, but the current implied NAV is over £23 per share, ie a value of over £800M at the current Wilson & Sons price.
So working backwards, the non family shareholders own roughly £400M in OCN.
The family own roughly £200M of OCN & Hansa slightly over £200M.
That means the cash value of Hansa would be around £500M in total, or over £4 per share. The 2 family own under 30M shares, so I'll assign them £120M to be on the safe side.
So the £1.1 Billion we're talking about in total is split into 3 groups the 2 family's have £320M of it, £380M of it belongs to the other Hansa investors & £400M of it belongs to the other OCN shareholders.
Leverage wise you'd say its still possible for the family's to still keep control of the empire in a convoluted structure but its going to be extremely difficult to do & the vast majority of shareholders in OCN & Hansa know what's coming.
They've seen the years of pathetic Investment performance that Hanseatic have given everyone, they are not going to put up with it, they will want cash so they can get away from them & get decent returns on there money elsewhere.
The breakdown of the assets show's that Hansa doesn't have the cash to buy OCN all it could do is offer OCN shareholders shares or a cash/shares combo, but no-one in there right mind is going to take A shares in this day & age & are highly unlikely to take even the voting shares unless there being offered full value for there OCN shares. But in doing that the 2 family's would lose control of Hansa because they only own 25% of OCN compared to our 48% & when that's converted into Hansa A shares there total holding would drop below 50% of the A shares....cont...
From Mancman1
.."Ownership looks quite complicated. I think William Salomon owns 27% of Hansa and 13% of Ocean Wilsons, and Hansa owns 25% of Ocean Wilsons. Ocean Wilsons owns 56% of Wilson, Sons. Christopher Townsend owns 11% of Ocean Wilsons. Salomon is on the Board of all three companies, Townsend on the Board of Ocean Wilsons and Wilsons.
I can't figure out how you would untangle all that and simply merge the two companies.
I imagine that highly paid corporate lawyers will come out with a solution that benefits the major stakeholders..."
"PSA Is Said to Show Interest in Port Operator Wilson Sons
Controlling shareholder Ocean Wilsons is reviewing investment
Ocean Wilsons says it’s received offers for its stake
By Vinicius Andrade and Manuel Baigorri
January 31, 2024 at 1:07 PM GMT
PSA International Pte, the port operator owned by Singapore state investor Temasek Holdings, has shown interest in acquiring Wilson Sons SA, a Brazilian port and maritime logistics company, according to people familiar with the matter.
Potential buyers in China also have shown interest, said the source......"
Maybe, baby....
Seems there was a Bloomberg article suggesting interest from PSA in Wilsons. That caused an unusual volume in the shares and a statement that OCN that there were no changes since the earlier announcements re the strategic review..
Encouraging signs indeed! There seems little case for selling at £13 whilst still high potential for a deal announcement at any time, and resultant NAV range of £26 -36 based on Brazil press rumours. After decades in this one I can be patient a little longer!
Seemed to move through £13 without much resistance
Approved (unsurprisingly) 94% to 4%, with 2% abstained.
The EGM is scheduled to start at 9am Brazil time
This must be the moment to make an announcement
In anticipation I was a buyer today
I have a price in mind for tommorrow evening
Hi Livingstone20,
FWLIW, I'm inclined to your interpretation, as you explained in more detail elsewhere (which I rec'd)
.."I’m hoping I’m not just seeing what I want to see but my potential narrative on that is different. Perhaps the auction agreed a share price way back, they have ‘nickel and dimed’ a few extra centavos in final negotiations, or as it has dragged on, as an exiting shareholder they want their income share to the date they exit and they have settled on this strange amount. It just otherwise seems very odd to suddenly introduce a quarterly dividend, in the midst of a sale process with no mention of a new dividend policy. The only party who benefits from a quarterly dividend who couldn’t wait for the regular annual dividend is the majority exiting Wilson shareholder..."
The last line was quite persuasive for me.
We'll find out soon enough!
ATB
Last night Wilson Sons announced they would pay an interim dividend and go xd on 23/1 - same day as their EGM on the retention plan for execs for M&A period. Coincidence or another condition/negotiated point co-ordinated with deal??
Remember the last RNS quoted NAV for Wilson was for end of Sept and well up in Brazil since then. The price range quoted in the Brazilian press articles gives £20-30 NAV just for Wilson, before adding the £6 investment fund. If I was them I’d distribute the disposal cash, wind up OCN, merge rump into Hansa and thus materially reduce the double discount, unlocking masses of presently lost value. Should they choose to follow that path I will buy a nice yacht and sail it to Brazil and take in the carnival….!!! GLA
Hi LOTM - thanks for this which I would have probably missed. Having waded through much of it (a normal summarised version would have been easier to follow, tbh) but overall, I agree the Nos look quite good to me, too.
The outcome of the 'review' of the port ops / possible offers for this business, remains the main support of the sp at present, I guess, which we all await with interest. Presumably any deal will be around the present NAV of £14 ps odd for it and if so, how will the proceeds be utilised?
A return of capital and / or a special 'one off' dividend or tipping much of it into OWIL with a smaller distribution to shareholders if an agreement is reached? Given the family control, the 'Hedge Funds' portfolio could be liberally infused with much of the cash and then we'd wind up with a quasi investment fund to run on with...
Any thoughts on that? - sasa.
Wilson & Sons December numbers & quarterly numbers have just been published.
https://ri.wilsonsons.com.br/en/
Some pretty impressive numbers in there.
The question is how did they translate into $ for the quarter ?
Sadly it will be quite a few weeks before we get to find out & what sort of dividend they will be paying out because of them.
GLA
LOTM
The key bit, from 'Management Proposal'
.."In view of the strategic review being carried out by the Company's indirect controlling shareholder, Ocean Wilsons Holdings Limited (“OWHL”), which has the potential to result in an operation involving the transfer of its direct or indirect equity interest in the Company (“Potential Operation”), as disclosed in the Material Facts released to the market on 12 June 2023 and 14 November 2023, the management has structured, with the assistance of specialised advisors, as a way of preserving and maximising the Company's value in a Potential Operation, as well as compensating and retaining the
Company professionals, a retention and non-competition plan for the management...."
GLA
But this may be Bradesco just drumming up business/interest.
Story continues
"..It is worth noting that, according to a June report in the newspaper O Globo, MSC was negotiating the purchase of 57% of Wilson Sons in a transaction of approximately R$5 billion or R$8.8 billion for 100%, which caused the shares to soar at the time.
However, as reported by the company on November 14, Ocean Wilson confirmed that during the competitive process, the controlling shareholder received several non-binding offers.
In the house's view, the offers could raise the acquisition price to the upper range of R$19.90 to R$25.60 per PORT3 asset or a multiple of 9 times to 11 times the EV/Ebitda multiple (EV = market value + debt; Ebitda = earnings before interest, taxes, depreciation and amortization) for 2024. "This could lead to a 23% to 58% rise in the shares compared to Wednesday's closing price," says the bank.
In addition, this unexpected proposal to approve a non-compete and retention plan could also be part of the closing conditions of the deal, suggesting that a binding offer and, consequently, the announcement of the deal seem imminent.
BBI continues with an outperform recommendation for Wilson Sons' shares with a target price of R$ 18.00 for the end of 2024..."
GLA
Https://www.infomoney.com.br/mercados/wilson-sons-port3-plano-de-retencao-indica-acordo-iminente-de-compra-e-pode-ser-catalisador-para-acoes/
BBI Review
Wilson Sons (PORT3): Retention plan indicates "imminent" purchase deal and could be catalyst for shares
In Bradesco BBI's view, MSC seems to be the favorite candidate to acquire Wilson Sons
InfoMoney Team
2023-12-21 10:13 AM • Updated 21 hours ago
Yesterday (20), after the market closed, Wilson Sons called an extraordinary general meeting (EGM) for January 23, 2024 to propose a non-compete and key executive retention plan.
The move is due to the possibility of an M&A transaction confirmed by its controlling shareholder, Ocean Wilson Holdings Limited (OWHL), on June 12 and November 14.
In Bradesco BBI's view, the news indicates that a deal seems imminent and MSC appears to be the favorite candidate to acquire Wilson Sons. PORT3 shares recorded gains of 0.68%, at R$ 16.33, at 10:06 am (Brasília time) in the session this Thursday (21)...."
FWIW, DYOR etc etc
There has been a continued increase in share price of Wilson Sons. This is not reflected in OW price
I intend buying even at this price of 1120p
I know how the controlling families benefit from the 'fund of funds' arrangement, LOTM - 13, having followed Oceans for yonks both directly and via Hansa...
My critique was sarcastic; I'd be less cynical if there was a preponderance of growth vehicles in there, rather than a bunch of 'hedge funds' hitherto, which would have performed much better, as you say - sasa.
Hi sasa43
You clearly don't follow OCN closely otherwise you'd clearly know why there is an investment portfolio.
The 2 controlling OCN family's own/run the asset management firm, where all there friends & extended family no doubt work & get jobs they wouldn't get otherwise.
It costs us the minority shareholders $ millions each year in fees & total under performance.
If the funds had simply been invested in the index that OCN keep quoting in the annual reports since 2007 the value of the investment portfolio would be at least $300m higher than it is now & then add on $50M in fees paid during that time & you'll soon realise how much wealth this cosy set-up has cost outsiders over the past 16 years.
LOTM
Yep, the port ops. continue to make good progress whereas the hotchpotch of collective investments continues to languish.
Why this unrelated multifarious portfolio is still retained defeats me, tbh - if a sale of the shipping business is finally agreed, one has to wonder what we'll be left with? Better to sell the 'baggage' than the fundamental towage activities, surely?
Notwithstanding this gripe, however, it's certainly encouraging that the aggregate asset value remains double the current sp; certainly appealing, pending further developments - sasa.
‘A number of offers’ is very good news!!