Saturday, October 18, 2014

Fung gets heavy on probity

Aquis has extended its offer for Reef Casino Trust as reported at the Cairns Post: Cairns Reef casino takeover by Aquis developer sets firm new deadline for action. Extensions in takeover bids are not at all unusual. The bid was to expire 31 October but has now been extended to November 28 to allow two principal conditions to be satisfied.

Acceptances are now at 81% with 90% a condition which allows compulsory acquisition of any stragglers. Presumably the acceptances include the 71% holdings of Accor and Casinos Austria. This really shouldn't be any problem as posted previously it doesn't really make sense to accept before other conditions are fulfilled as you don't get paid anyway and lose control of the ability to sell on market should you subsequently wish.

This leaves the probity requirement and regulatory approvals from the Office of Liquor and Gaming. Which is where it gets more interesting because if we take Mr Fung at his word he is implicitly threatening to walk away from Reef, and possibly Aquis, if he doesn't get his probity clearance in the next month.
Aquis is considering its position if the Queensland gaming regulatory approval conditions are not satisfied by 21 November 2014. If such approvals are not obtained by such time, Aquis is currently minded to not further extend the Offer beyond 28 November 2014 although Aquis reserves its right to do so. If this final regulatory approval condition remains unsatisfied at the end of the Offer Period, the Offer will lapse and no RCT units will be purchased pursuant to the Offer.
The ASX announcement stresses that the Reef offer is a separate transaction to the Aquis proposal although a "valuable stepping stone". There is a somewhat stronger emphasis on this in the reported comments from Fung in the Cairns Post where the Reef is “a necessary and fundamental step in the group’s plan to ­develop the $8.15 billion Aquis integrated resort at Yorkeys Knob”. This is also what the ACCC was told.

Similarly, comments on the probity investigation are also rather more opinionated:
He said “in our view the extension provides ample opportunity for OLGR (Office of Liquor and Gaming Regulation) to complete their investigations and advise us of the outcome.”
The ASX announcement states that Aquis considers it has made good progress with regulatory approvals. Would he really pull the plug if a probity inquiry was not completed to his own schedule? It is suggestive of some tension between Aquis and the State Government as also indicated in recent media reports. I'm not sure that making threats around a probity inquiry is what I would call appropriate but then maybe I have different standards.

He could have been watching too many Godfather movies or that's just the way they do it in Hong Kong, where there has also been a lot of political turbulence of late. The comrades responded to the democracy protests by summoning the HK business elite to Beijing in a move straight from the George Orwell playbook: Trouble in Hong Kong: Beijing summons tycoons

Tony Fung missed out on the exclusive list of seventy invitees. Perhaps he was busy that day?

Source: South China Morning Post

Note: A previous post on a questionable business deal associated with Tony Fung was sourced from well know HK shareholder activist and ex investment banker David Webb who has supported the HK protesters: Admiralty address

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