Thursday, February 27, 2014

Reef trading buoyant on ASX

The volume of trading in Reef Casino shares has been interesting this week and spiked well above typical historical levels:


As previously previous posted Reef (RCT) is typically a highly illiquid and thinly traded stock with approximately 70% held by Casinos Austria and Accor which are now locked in to the Aquis agreement.

The top 20 holders published in the annual report is mostly absent the kind of institutions which predominate the large company registers and includes a number of private individuals. I imagine smaller holders outside the top 20 are likely to include a good proportion of Cairns residents. Warren Entsch's boy had a small holding of a few thousand included in his parliamentary disclosure.

However there is no bidding war apparent in this activity as it was sold down slightly today, on buoyant volume again, at prices still way below the takeover bid. The takeover is conditional on 90% acceptance beyond which the remainder can be compulsorily acquired.

Reef (RCT) closed today at $3.98 v the offer of $4.35 to be consummated within 6 months or so. This period may also include an interim half-yearly distribution of around 10c. So at current prices there is still a quite healthy return if the takeover is completed.

Taking a profit to mitigate risk of deal not being finalised, or any other specific reason, is not necessarily an unreasonable thing and may be appropriate in many circumstances.

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