MCK - Millennium & Copthorne Hotels.

[Vaygor1]

Not quite sure I understand - how would this work?

Your example uses solely the market cap for MCK's shares to arrive at $258M. I have no idea if that is the correct way to look at it, or if the market cap for their preferential shares (MCKPA, which are worth $3.20/share x 52.74 million shares = $169M) should also be added when comparing how the market is valuing the company in relation to its calculated/stated equity.

[BlackPeter]

Your example uses solely the market cap for MCK's shares to arrive at $258M. I have no idea if that is the correct way to look at it, or if the market cap for their preferential shares (MCKPA, which are worth $3.20/share x 52.74 million shares = $169M) should also be added when comparing how the market is valuing the company in relation to its calculated/stated equity.

Cheers - got you ... and you might well be right. Will have another look into that when I get around it.

[BlackPeter]

Your example uses solely the market cap for MCK's shares to arrive at $258M. I have no idea if that is the correct way to look at it, or if the market cap for their preferential shares (MCKPA, which are worth $3.20/share x 52.74 million shares = $169M) should also be added when comparing how the market is valuing the company in relation to its calculated/stated equity.

Interesting - and I guess your question is basically asking, whether the MCK preference shares are classified as debt or as equity to the company. Now - I am not an accountant ... and I would appreciate the input of somebody in the know on this subject, but it appears that even the accounting standards are not clear on this question:

https://blog.kpmg.lu/for-preference-...ied-as-equity/

If we look into note 7 (page FIN-14) of their financial statements of their annual report (http://nzx-prod-s7fsd7f98s.s3-websit...311/296919.pdf), then they clearly classify the preference shares as equity. However - if somebody buys all the ordinary shares, they would have 100% of the control and the preference shares would be only a liability for them.

In any way - if anybody wants to liquidate the company they would need to redeem the preference shares, which means that for them it would be just another liability, i.e. no matter how they are classified we would need to deduct the redemption value of these preference shares from the "underlying company value".

Another interesting question though would be the redemption value of these preference shares (which I would assume is not the market value). Note 7 of above annual report values the outstanding 52.7m preference shares with $33.2m. If this is what the company would need to return to the preference share holders, than my calculation would not look too much different.

I calculated the underlying value of MCK (equity minus CBL shares) as $563m. If we remove as well the book value of the preference shares, than we still have left $529m which you can buy for $97m.

Still looks cheap to me.

Any bean counter around who could either confirm or otherwise highlight what I got wrong?

[Vaygor1]

..... Still looks cheap to me.

Any bean counter around who could either confirm or otherwise highlight what I got wrong?

Yeah. Look cheap to me too, regardless of how the MCKPA is treated.
Greater Fool, I recall you hold (or once held) a few MCKPA. Can you shed some light on this one?

Disc.
Hold a small amount of MCK, and comparatively, a lot more CDI.
Do not hold MCKPA

[greater fool]

Worthless content removed.
Better material here;

https://www.sharetrader.co.nz/showth...l=1#post773620

[BlackPeter]

Pref shares are capital. See note 7 of accounts.
Main differences to ordinary shares are: non voting, and redeemable by resolution of directors at price calculated
based on VWAP on-market NZX trades.
Originally issued @64cps, to raise ~$110m, primarily to fund the First Sponsor Group (mis)adventure.
FSG, a China based property development company, incorporated in Bermuda, headquarters in Singapore.
FSG a few years later, IPO'd to a listed Singapore company, and MCK-MCKPA holders received FSG shares via a share consolidation.
The pref shares $33m book value will be the post consolidation proceeds from issue.

Thanks for that. I guess the 64 million dollar question now is - how much money would preference shareholders expect if these are going to be redeemed? Is the book value a sensible gauge for this?

[percy]

[QUOTE=greater fool;780628]Pref shares are capital. See note 7 of accounts.
Main differences to ordinary shares are: non voting, and redeemable by resolution of directors at price calculated
based on VWAP on-market NZX trades.



Interesting....................................... ........

[BlackPeter]

Oops:

MCKdepth.JPG

All up from here?

[percy]

2,660,300 traded at $2.35......................Interesting.

[BlackPeter]

2,660,300 traded at $2.35......................Interesting.

True. 2.5% of all issued shares.

According to the last annual report there are only 2 shareholders who could sell such a large parcel:

• CDL Hotels holding (which belongs to MCK International which belongs to CDL Singapore which belongs to the Kwek family)
• Aberdeen Standard.

Unlikely CDL sold some, which leaves only Aberdeen Standard (it seems to be their job in the team anyway to keep the price down). Question is - who bought?

Start of a full takeover?