I'm curious what people think about the timing of the going-private transaction. I just noticed that when Abax and others filed the "Commitment Letter" with the SEC at the end of December 2012 (which provides for a $35 million mezzanine loan, on top of the larger China Development Bank loans), they included a termination date of March 30, 2013. Now of course they could hit March 30 and extend the agreement, but if they wrote in March 30, I suspect that the partners thought the deal would be done by then. And given that they set that date at the end of December, they may have a bit more information on the status of the deal than we do. Or perhaps they just wanted to pressure the Special Committee not to delay its decision. BUT, I have no experience with this sort of agreement or deal, so I welcome any thoughts, contrary or otherwise.Here's the link to the agreement and the language:http://www.sec.gov/Archives/edgar/data/1398551/0000909518120...Section 2. Commitment TerminationThe Commitment Party’s commitment and other obligations set forth in this Commitment Letter will terminate on the earliest of (A) 30 March, 2013, (B) the date the Operative Documents become effective and (C) the date the acquisition agreement for the Transaction is terminated (such earliest date, the “Termination Date”). Before the Termination Date, the Commitment Party may terminate its commitment hereunder if any event occurs or information becomes available that, in its reasonable judgment, results in, or is likely to result in the failure to satisfy any condition set forth in Section 1.
Just reading some of the other related SEC filings for the loans to finance the go-private deal, it looks like some of the loans were drawn down right away (12/28/12). One loan needs to be repaid in December 2013. I would think that if some of the loans were drawn down and are already costing interest expense that the buyout group expects things to progress soon. Item 3. Source and Amount of Funds or Other Consideration. The response set forth in Item 3 of the Schedule 13D is hereby supplemented by the following. With respect to the Transaction described in Item 4 of this Schedule 13D, the Reporting Persons anticipate that approximately US$261 million will be expended in acquiring outstanding shares of Issuer Common Stock that the Consortium does not already own (the “Publicly Held Shares”). On December 27, 2012, Yongye International Limited ( “ Parent ” ), a Cayman Islands exempted company established in connection with the Transaction, entered into a Term Loan Facility Agreement (the “ Loan Agreement ” ) with the China Development Bank Corporation (“CDB”), pursuant to which CDB will provide a $99 million loan facility (the “Loan”) to Parent in connection with the Transaction. The Loan was drawn down on December 28, 2012. The Loan carries interest at the six months U.S. dollar London Interbank Offered Rate (LIBOR) plus 300 base points per annum. The Loan will mature and Parent shall repay the full amount of the loan in December, 2013. The description of the Loan Agreement in thisSchedule 13D is qualified by reference to the Loan Agreement itself, a fair and accurate English summary of which is attached hereto as Exhibit 99.2 and is incorporated by reference in its entirety. On December 28, 2012, Parent received a letter (the “Debt Commitment Letter ” ), from the China Development Bank Corporation, indicating that it will provide debt financing in the form of a loan facility in an aggregate amount of up to US$232 million to, among other things, fund a portion of the consideration payable in connection with the proposed acquisition of the Publicly Held Shares. The upfront fee to be charged by CDB for the financing under the Debt Commitment Letter will not be less than US$2 million (the “Upfront Fee”). On December 27, 2012, MSPEA Agriculture Holding Limited ( “ MSPEA ” ) and Parent entered into a loan agreement, under which MSPEA extended a loan of US$800,000 to Parent for the payment of part of the Upfront Fee (the “ MS Loan Agreement ” ). Such loan was drawn down on December 28, 2012. On December 27, 2012, Mr. Zishen Wu and Parent entered into a loan agreement, under which Mr. Wu extended a loan of US$800,000 to Parent for the payment of part of the Upfront Fee (the “Chairman Loan Agreement”). Such loan was drawn down on December 28, 2012. On December 28, 2012, Abax Global Capital (Hong Kong) Limited, a Hong Kong company (“Abax HK”), on behalf of certain of the funds managed and/or advised by it and its nominee entities and its and their affiliates, issued a financing commitment letter (“Mezzanine Commitment Letter”) to Full Alliance International Limited (“Full Alliance”), under which Abax HK conditionally committed to provide a mezzanine debt of US$35 million, as part of the total proposed mezzanine and equity financing of US$50 million to be provided by Abax HK to partially fund the Transaction. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. The response set forth in Item 6 of the Schedule 13D is hereby supplemented by the following. On December 27, 2012, Parent entered into the Loan Agreement with CDB. On December 28, 2012, Parent received the Debt Commitment Letter from CDB. On December 27, 2012, Parent entered into the MS Loan Agreement with MSPEA. On December 27, 2012, Parent entered into the Chairman Loan Agreement with Mr. Zishen Wu. On December 28, 2012, Full Alliance received the Mezzanine Commitment Letter from Abax HK. The descriptions in Item 3 herein of the agreements listed in this Item 6 are incorporated herein by reference. The summaries of any such agreements herein are not intended to be complete and are qualified in their entirety by reference to the full text of such agreements.
wouter28 (or anybody else),Can you figure out whether the timing of that has any implications as to the likely timing that this will all play out by a particular date? Thanks.as always, i am full of carp
My guess is that since nothing has been announced yet, and since we're two weeks away from Q4 earnings, that they are unlikely to announce an agreement prior to that time. I would also be surprised if they announced an accepted deal on the same day they release Q4 too as that would just seem unusual to me, albeit not impossible. Either way, even if they came to an agreement in the next couple of weeks, they might have a tough time closing the deal and finishing the process of delisting before they have to announce Q1 earnings in May.I'm hopeful that the fact that this process has taken a little longer than some expected is a good sign that the special committee wasn't interested in rubber stamping the first lowball offer and we'll wind up getting something more reasonable for our shares, but only time will tell.
Given what is publically available, it is very difficult to know what is really going on. But if you look at both what kidchicago and I pointed out, it might indicate that the buyout group thought this process would move more quickly. I would hope that mekong’s explanation of this taking longer due the special committee not just taking the initial offer is right. If they are negotiating, it would explain why this is dragging out. Of course, the special committee could just be moving slowly to give the appearance of negotiating just to cover themselves from lawsuits. I think that once we do have an accepted offer by the Board, the deal will still take another 2-3 months before it will be finalized. This is something to keep in mind for April options holders. I have both April and July calls and depending on when the offer acceptance is announced, I may sell my April options on the pop from the acceptance announcement and hold onto my July calls as the pop will probably still be a discount to the go-private price.Since full-year earning will be announced in about 2 weeks, I also don’t think we will hear anything until after the earnings are released.
Thanks, Wouter, for your continued insights. I joined the group of shareholders (near 5% of outstanding shares) that has communicated with management. I have not been particularly active in it, though there is ongoing discussion among members via email.One member sent a message to the special committee and received a response just a few days ago from the financial firm that was evaluating the offer for the committee and was told that negotiations between the buyout group and the special committee were ongoing and that the special committee was taking its responsibility to shareholders very seriously. The letter indicated that was all that could be disclosed, though one can imagine that the offer price may well be a key part of that negotiation. Mind you, this is report is second hand, though the person reporting the communication seems trustworthy and credible.
NPC. NPC. NPC. The new policies and appointments will become clearer and businesses sill have a better idea how to proceed. This is likely to be at least as important in the outcome as it would be for a U.S. govt contractor or farmer or energy company. As for the year end financials it would be surprising if they did not support the existing (or lower offer. The existing already is a substantial premium to market.Any case I think yes we will know something more definite in just a few weeks.
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