Accordia Golf Trust Delisting Offer Of $0.732 Likely To Go Through

Good news for Accordia Golf Trust (AGT) (SGX:ADQU) unitholders as its sponsor, Accordia Golf Co., Ltd., has offered to buy all of its 88 golf courses at a price that’s equivalent to S$0.732 per unit. This is a 5.1% premium to the net asset value of Accordia Golf Trust.

Our Early Retirement Masterclass trainer, Chris Ng, mentioned that it might be a good bet in view of a possible offer for Accordia Golf Trust in Dec 2019. It finally materialised.

What it means for unitholders

The Trustee-Manager has stated its intention to distribute the proceeds to the unitholders after deducting the fees.

There will be an approximate 0.5% of the purchase price to be paid to the Trustee-Manager as a break fee as they no longer need to manage the Trust anymore. This is like a ‘retrenchment’ benefit.

There are other costs and expenses that would comprise up to 2.5% of the purchase price.

This means that unitholders can expect to receive about S$0.71 dividends per unit (97% of S$0.732) after costs.

The distribution will happen in two phases. The first distribution is approximately S$0.673 per unit (92% of S$0.732) and unitholders should receive within a month when the payment has been collected. The second distribution is approximately S$0.037 per unit (5% of S$0.732) and would be given after ascertaining there would be no claims against AGT.

Would you accept this Offer?

I need to declare that I have no holdings in Accordia Golf Trust and have no intention to trade it.

Personally, I find the Offer is fair because it is priced above the net asset value. But of course unitholders would tend to compare the Offer price against their buy price.

We can look at the volume on price chart from ShareInvestor.com below. The light blue bars on the left side of the chart indicates the transaction volumes done on the respective prices. Majority of the transactions were done below the Offer price of S$0.732 and hence, I think that majority of the unitholders are profitable at this Offer price so it is likelier they would accept the Offer.

This deal has to be approved by unitholders during an EGM on 14 Sep 2020. The sponsor has 28.85% stake in AGT and will be abstaining from voting.

This would be a special resolution involving a large disposal of assets and a 75% approval is required to pass the resolution. My guess is that it is likely to go through because the Offer should entice enough unitholders to vote in favour.

What would happen to Accordia Golf Trust after the sale and distribution?

Accordia Golf Trust would not have any operations after the sale of all its properties. According to SGX rules, Accordia Golf Trust must find a new business or risk delisting. But the Trustee-Manager has openly announced that they will wind up the Trust voluntarily,

Accordingly, the Trustee-Manager intends to undertake a voluntary winding up of AGT (the “Winding Up”). The timing and details concerning the special distributions proposals, the status of AGT following Completion and the proposed Winding Up will be set out in the Circular.

This situation is similar to Saizen REIT (if you can recall), whereby all its residential properties in Japan were sold and most of the the proceeds were distributed as dividends to the unitholders. There were talks for Sime Darby to do a Reverse Takeover (RTO) of Saizen REIT and inject its Australian properties into the Trust. Unfortunately the deal fell through and Saizen REIT was delisted on 6 Oct 2017.

Unitholders should expect a final capital distribution when the Trust winds up.

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