I have held shares in China VTM (HK:893) for some time. They were originally acquired during the boom in iron ore prices and I have been sitting on a loss almost from the day I purchased them.
Earlier this week, the company announced that it had received a letter from it's controlling shareholder that it was interested in a possible privatisation of the company. The possible privatisation would be subject to a number of conditions, of which the most significant is the provision of finance for the offer. Given that the offeror (and concert parties) already owns around 50 percent and that the company is cash flow positive and sitting on a reasonable amount of cash (both as per most recent interim report) and assuming that the offeror puts at least some of its own money on the table (a point on which the announcement is silent), I'd like to believe that financing would be available.
If it proceeds, the indicated offer price is HK$1.72.
I have added some additional shares to the portfolio in the belief that the offer will proceed. If I am right, then there is about 8% upside from current levels. If the offer does not proceed, then the share price will probably head materially lower in at least the short term.
I paid HK$1.59 for the additional shares.
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