SCT - Scott Tech

[Under Surveillance]

Big jump in JBS acceptances announced today. How high is this going before Thursday?
Summary for JBS Australia Pty Limited
For this disclosure,—
(a) total number held in class: 9,663,115
(b) total in class: 45,473,890
(c) total percentage held in class: 21.250%

Acceptances closed at 5.00 pm yesterday with Link, as did applications for new shares under the rights issue.

Whether the 9.663 million will go much higher depends on at what point of yesterday the notified tally was taken, and possibly on the extent of late-in-the-day acceptances.

[Snoopy]

Big jump in JBS acceptances announced today. How high is this going before Thursday?
Summary for JBS Australia Pty Limited
For this disclosure,—
(a) total number held in class: 9,663,115
(b) total in class: 45,473,890
(c) total percentage held in class: 21.250%

With such a big jump in one day, I am picking one of the substantial shareholders has sold. Odds on it is the Urquart estate. Maybe Fisher having second thoughts about selling after attending the presentation in Auckland (the first time Scott's has ever presented in Auckland?) and seeing what a stunning bargain they are holding?

SNOOPY

[Snoopy]

On the matter of a return of capital, Hopkins volunteered this as a possibility during the Q&A session at the Wellington road show; a video of the session is posted on the SCT website.

The video of the Wellington presentations may be found here:

https://www.youtube.com/watch?v=4rornRtTamM

It is interesting to note that Brent Eastwood, JBS Oz CEO, had commissioned their owned independent valuation of SCT that was "not materially different" from the Northington valuation.

SNOOPY

[ScripMan]

Interestingly, JBS Oz CEO said at the Auckland briefing that their valuation range topped out below bottom of Northington range (NZ$1.08)

[ScripMan]

I checked with Scott CFO Greg Chiles today and there is unfortunately no live web-cast available for tomorrow's meeting.

[Under Surveillance]

My back of an envelope calculations indicate that JBS could be up for around $50 million to get 50.1% of SCT, if the scheme is approved at the SGM.

Assuming that 2 million shares are taken up under the rights scheme, and that the acceptances for JBS purchases don't exceed by much the 9.7 million shares as notified this morning, the arithmetic is ....

45.5 million shares issued as of 17 September 2015 plus 2.0 million new shares = 47.5 million post rights issue

47.5 million less 9.7 million JBS acceptances = 37.8 million shares held other than by JBS

So, to get to 50.1%, JBS needs to hold 37.9 million shares. Under the scheme, and given the assumptions above, the composition of the 37.9 million will be 9.7 million acceptances plus 10 million placement plus 18.2 million top up.

Given the assumptions above, all up JBS will pay $52M + change for 50.1%. Of this $13M+ goes to existing shareholders and $38M+ to SCT.

[Snoopy]

My back of an envelope calculations indicate that JBS could be up for around $50 million to get 50.1% of SCT, if the scheme is approved at the SGM.

Assuming that 2 million shares are taken up under the rights scheme, and that the acceptances for JBS purchases don't exceed by much the 9.7 million shares as notified this morning, the arithmetic is ....

45.5 million shares issued as of 17 September 2015 plus 2.0 million new shares = 47.5 million post rights issue

47.5 million less 9.7 million JBS acceptances = 37.8 million shares held other than by JBS

So, to get to 50.1%, JBS needs to hold 37.9 million shares. Under the scheme, and given the assumptions above, the composition of the 37.9 million will be 9.7 million acceptances plus 10 million placement plus 18.2 million top up.

Given the assumptions above, all up JBS will pay $52M + change for 50.1%. Of this $13M+ goes to existing shareholders and $38M+ to SCT.

As usual when the AGM is held in Dunedin, the Otago daily Times covers it well.

http://www.odt.co.nz/news/business/3...rol-scott-tech

"With the JBS capital injection, expansion in Dunedin is now high on the management's agenda, and with a second share tranche taking JBS to 50.1%, Scott could, in theory, get up to $45million in new capital."

From Scott's own press release tilted:
SHAREHOLDER APPROVAL OF JBS AUSTRALIA PTY LIMITED SCHEME OF ARRANGEMENT

"Subscriptions received pursuant to entitlements: 1,975,618 ordinary shares totalling $2.75 million, representing a take -up of entitlements of 34.76 %."

That sounds poor, until you remember that those shareholders accepting the JBS offer were not allowed to apply for the rights offer as well.

The last SSH figure from JBS was that they held 10,129,971 out of 45,473,890. Other shareholders have added 1,975,618 to the grand total since that notice. We must add in the 10,000,000 shares issued to JBS to the total figure (pre top up) as well.

So total percentage JBS holding prior to top up is:

(10,000,000 + 10.129,971) / (45,473,890+10,000,000+1,975,618) = 35.0%

To make 50.1% JBS need an additional number of shares 'S' calculated as follows:

(10,000,000+10,129,971 + S)/( 45,473,890 +10,000,000 + 1,975,618 + S) = 0.501

Solving this implicit equation for 'S' I get: S = 17,339,229 shares



Hence total cash injection into SCT from JBS and all other shareholders will be:

(17,339,239+1,975,618) x $1.39 = $26.874m

That wipes out the $17.4m worth of debt, leaving:

$26.9m -$17.4m = $9.5m

on the table as 'surplus capital'.

SNOOPY

PS Double Check on New Share Numbers

Share Origin	Share Numbers
Pre Arrangement Capital	45,473,890
Initial JBS Placement	10,000,000
Other Shareholder Exercised Rights	1,975,618
JBS Top Up	17,339,239
Total Shares (Post Arrangement)	74,788,747

Final JBS Holding Percentage:

(17,339,239+ 10,000,000+ 10,129,971)/ 74,788,747 = 0.501 (50.1%) - Correct

[Under Surveillance]

As usual when the AGM is held in Dunedin, the Otago daily Times covers it well.

http://www.odt.co.nz/news/business/3...rol-scott-tech

"With the JBS capital injection, expansion in Dunedin is now high on the management's agenda, and with a second share tranchetaking JBS to 50.1%, Scott could, in theory, get up to $45million in new capital."

From Scott's own press release tilted: SHAREHOLDER APPROVAL OF JBS AUSTRALIA PTY LIMITED SCHEME OF ARRANGEMENT

"Subscriptions received pursuant to entitlements: 1,975,618 ordinary shares totalling $2.75 million, representing a take -up of entitlements of 34.76 %."

That sounds poor, until you remember that those shareholders accepting the JBS offer were not allowed to apply for the rights offer as well.

The last SSH figure from JBS was that they held 10,129,971 out of 45,473,890. Other shareholders have added 1,975,618 to the grand total since that notice. So total percentage JBS holding prior to top up is:

10.921,971 / (45,473,890+1,975,618) = 23.0%

To make 50.1% JBS need: 50.1/23.0 x 10,921,971 = 23,790,902 shares

So top up shares total: 23,790,902 - 10,921,971 = 12,868,931

Hence total cash injection into SCT from JBS and all other shareholders will be:

(12,868,931+1,975,618) x $1.39 = $20.624m

That neatly wipes out the $17.4m worth of debt without leaving too much on the table as 'surplus capital'.

SNOOPY

Try again, Snoopy.

Shares on issue before scheme of arrangement 45,473,890
Plus increased shares from rights issue 1,975,618
Total non-JBS shares 47,449,508
Less purchases by JBS from non-JBS holders 10,129,971
Non JBS holdings 37,319,537

After the scheme is completed, 37,319,537 shares will be 49.9% of all the shares issued.
To get to their 50.1% JBS need to hold another 37,319,537 shares for 49.9%, plus a further 149,673 for the 0.2% to make 50.1%. So, 37, 469,200 altogether.


Shares on issue after JBS deal - JBS 37,469,200 50.1%

Others 37,319,537 49.9%
Total shares on issue 74,788,737 100%


Sources of shares, and costs, of JBS' holding of 50.1%:


Acceptances 10,129,971 $14,080,971

Placement 10,000,000 $13,900,000

Further placement 17,339,229 $24,101,528

37,469,200 $52,082,499



Cash raised by SCT from rights and from placements to JBS:


Rights $ 2,746,109

Placement $13,900,000

Further placement $24,101,528

$40,747,637

[Snoopy]

Try again, Snoopy.

Quite right U.S. . Glad to see there is someone out there awake, to correct me when I post a load of bs. I have now corrected my calculation as you can see.

The problem for shareholders now is that with the number of shares on issue increased so massively -from 45m to 75m ( +66%) , that means the profit must go up by 66% for earnings per share just to stand still. Can SCT do this?

SNOOPY

[Under Surveillance]

Quite right U.S. . Glad to see there is someone out there awake, to correct me when I post a load of bs. I have now corrected my calculation as you can see.

The problem for shareholders now is that with the number of shares on issue increased so massively -from 45m to 75m ( +66%) , that means the profit must go up by 66% for earnings per share just to stand still. Can SCT do this?

SNOOPY

A pleasure to help you out, Snoopy.

A cynical response as to whether SCT can increase NPAT by 66% is that of course they can, as they demonstrated by increasing NPAT by 102% in FY 2015 (the task was made easier by NPAT in FY 2014 having dropped 41% from NPAT in FY2013).

Were you to ask whether SCT can increase NPAT by 66% in FY2016, after a relatively good year in FY2015, I would say it is unlikely, but conceivable if many stars align. Hopkins told the AGM on 26 November that: Our order book is at historically high levels. In addition, we are in the advanced stage of discussions in respect of multiple projects that if we win them it will take us to the next level of activity. For this reason we believe 2016 is going to be extremely busy and bring new challenges. This is susceptible of optimism, but extra activity and extreme busyness does not necessarily presage booming NPAT right away, and new challenges might bring new expenditures.