The Kuwait Clearing Company has agreed to assist NIC in collecting the 46% stake of Zain’s shares. The agreement also states that the Clearing Company will open its doors and receive requests from shareholders interested in participating in the deal.
Shareholders who can benefit from that arrangement:
- Shareholders who own less than 300,000 shares (that includes over 10,000 shareholder)
- Shares held before 6/9/2009
The shares will be placed in NIC’s portfolios and shareholders have to sign an agreement that prevents them from taking legal action in case the deal doesn’t go through. The Kuwait Clearing Company will accept request until three weeks after Eid.
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Loading ...Tags: Zain, Zain Acquisition, Zain Kuwait, Zain Minority Shareholders, Zain sale
Nevertheless, there are still rumors that the deal might not happen,, but you never know..
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I DOUBT there will be a deal. The buyers are simply “SUB-PRIME”: Malaysia’s alBukhary Group, India’s state-run Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL), and Vavasi Group.
2 Indian state-run telecoms who explicitly stated, “MTNL and BSNL would like to clarify that no view has been taken regarding participation in the said consortium.”
Vavasi Group’s has a major credibility issue. According to thenational.ae, “Issues have been raised about the lead member of the consortium, India’s Vavasi Group, by a Bahraini government minister and a respected leader of India’s technology industry.”
Malaysia’s Bukhary Group have said nothing since the announcement.
EVERYTHING smells very fishy..
Minority shareholders will be wasting their time registering their shares for a sale!
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Or decrease the free float and then pump and dump!
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Ok let me get what Adel & cid are implying
The Zain deal is doubtful, the guys who are supposed to buy it may not buy it.
If the retail investors figure this out then they will dump the shares, so one good way to decrease float is to invite retail investors to ‘participate’ in the deal, play them along and thus decrease the float in the market. Once the float is reduced it will be easier to keep the price up.
Then one fine day announce that the deal is off and then return the shares to the now ‘poor’ retail investors thereby pump and dump
But why is the clearing company getting into the picture. The clearing company is supposed to be neutral
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Saud Reply:
September 17th, 2009 at 9:08 pm
The Clearing Company is neutral, but they are only assisting NIC to collect the shares and they don’t have anything to do with the deal.
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But if you transfer your shares to NIC then I still think that you can sell them anytime you want. I believe all the Zain portfolios opened in NIC are Non-discretionary.
I’m sure Al Kharafi is not that stupid in putting his reputation on the line… if they are still transferring Zain shares then the deal is probably still on.
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Saud Reply:
September 17th, 2009 at 9:13 pm
Yes you can sell them anytime, but remember if you sell the stock you can’t buy it back later and participate in the deal.
The deal might still be on, but there are many rumors saying otherwise. I personally have no clue, but I’m hoping the deal happens for the sake of the shareholders.
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Adel Reply:
September 17th, 2009 at 9:44 pm
I agree that Al Kharafi are not that stupid. In fact, I believe that they are extremely smart. I will soon write a piece entertaining a conspiracy theory I think might be in the works.
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I am curious about two aspects of the deal
One, BSNL is a state owned firm, so will the execution happen as per schedule
take a look at this
http://timesofindia.indiatimes.com/news/city/ludhiana/BSNL-employees-stage-protest-on-bonus-issue/articleshow/5028040.cms
They seem to have employee unions and a bureaucracy to tackle
Two, In every deal there are the winners and there are the losers. The winners clearly are the 46% shareholders who are selling at KD 2.0. About 10% shares are with the management so the question is who are the 44% suckers left holding the stock. There was also a news report that most of the retail investors will be covered in the Al Khair scheme.
“We hope that these procedures would reflect how keen the head of al-Khair Group is to achieve and protect the interests of small investors and give them priority,” National Investments Co, another Kharafi-owned firm who is handling the sale, said in the advertisement on Wednesday.”
http://in.reuters.com/article/businessNews/idINIndia-42493320090916?pageNumber=1&virtualBrandChannel=0
so who are the losers
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Looking back at Qtel/Wataniya, it is interesting to compare to this proposed deal. Qataniyatel was done at a 80-90% premium to the price average in the months preceding, 40% to the last close with no tender offer required. EV/EBITDA was about 12x for the 51% controlling stake. Zain looks to be a similar EV/EBITDA. If you consider their target of doubling the subscriber base by 2011/12 (and presumably EBITDA) it actually, shockingly, doesn’t seem to be that bad, especially for a controlling stake (which is why 46% seems.. strange)
We know KIA has something like 24.6% of the 4.3bn shares and Al Khair officially has 11.3% of the shares. We assume that Al Kharafi has another 10% via coast, food etc.
I think I remember reading there were 10,000 shareholders with less than 300,000 shares. If we assume 50,000 shares on average, that gives us 500m shares or 11.6% of the total. So if half of these shareholders subscribe, you would get a 51% sale of Zain.
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Adel Reply:
September 21st, 2009 at 7:50 pm
Interesting comparison. However, there is a significant difference between the two deals. First, Qtel bought the stake; not a weird suspicious combination of state-owned companies and another company with no credibility (Vavasi). Second, the deal was done at the peak of the market, not while in a deep financial crisis.
As for your 46% question, I guess the reason is that Zain has treasury shares of 10%. This means that the float is 90%, and a majority would require 46% only.
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AAA+ Reply:
September 22nd, 2009 at 10:01 am
“So if half of these shareholders subscribe, you would get a 51% sale of Zain.”
Yes, agree,
However as Adel pointed out you need just one fourth of them to subscribe for the 46%
but the key question is what happens to the remaining 3/4th of the retail investors. Will they be left to fend for themselves. A Tender offer framework like the William’s act (http://law.jrank.org/pages/11330/Williams-Act.html) is urgently needed
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