Monday, March 5, 2018

The Story of GRP, Starland and ayondo

With the recent possible IPO news of ayondo Holding AG (ayonda), there were some request on IN for me to write a post after I inform them to look at GRP Ltd (GRP) and Starland Holdings Ltd (Starland) instead.

Do note that I am vested in the 2 counters, but have only very very small holdings.

Short Background of the 3 Parties:

Very long long time ago, GRP was in the business of providing hose supplies for the marine, oil and gas industry. In fact, I believe, many years ago, it was a Net Current Asset Value (NCAV) counter.

Then in the last few years, it went into property development and acquired 83.17% of Starland Holdings Ltd in Jan 2016 (The shareholding structure changed a lot during the year. But to summarized, 83.17% is the current ownership.).

Then in June 2017, ayondo Holding AG wanted to do a RTO with Starland and also had a loan from GRP. But in Sep 2017, the RTO was called off, and GRP as well as Starland had a settlement Ayonda.

The Interesting Bit - The Settlement

As Quoted from GRP's latest half yearly report:

“…On 30 October 2017, the Company announced that it had entered into an agreement with ayondo on converting the $2.1 million loan plus accrued interest of $0.0796 million into a redeemable convertible loan ("RCL"). Under the agreement the Company has the option to elect to convert the RCL into new ordinary shares of ayondo at an agreed conversion price. The agreed conversion price is 33% discount to the IPO price. In the event that the RCL is not converted into new ordinary shares, ayondo will repay the RCL and all accrued and unpaid interest in cash. Maturity date of the RCL is 30 September 2018 or such later date to be mutually agreed between the two parties.

On 30 October 2017, Starland announced that it had agreed with ayondo to convert $0.992 million in expenses incurred by ayondo which was paid by Starland on its behalf plus accrued interest of $0.035 million into the RCL amounting to $1.027 million. In the event that the RCL is not converted into new ordinary shares, ayondo will repay the RCL and all accrued and unpaid interest in cash. Maturity date of the RCL is 30 September 2018 or such later date to be mutually agreed between the two parties.

Starland and ayondo had also agreed to issue new ordinary shares of ayondo, at an agreed conversion price of 33% discount to the IPO price, as reimbursement of $1.141 million of expenses ("Acquisition Expenses") incurred by Starland Group in connection with the Proposed Acquisition ("Conversion Settlement"). Upon the conversion of the Acquisition Expenses into new ordinary shares, ayondo shall be released and discharged from any and all further payment obligations in respect of the Acquisition Expenses. In the event that the IPO does not occur prior to 30 September 2018, the Conversion Settlement shall cease and ayondo will not be required to reimburse Starland for the Acquisition Expenses…”

Other Reasons Why I Choose GRP and Starland?

1. Both of them are NCAV Counter. Both have high cash amount with low debt.

2. Starland just turned profitable and is intending to give out dividend on a later date as per their latest report.

3. GRP is growing and expanding in Singapore and Malaysia as well.

4. GRP have links with Luminor Capital Pte Ltd through his Executive Director, Kwan Chee Seng.

In Short

I am vested in GRP and then Starland. But due to their illiquid volume, I only held a very small holding. If you are interested, you should do more of your own due diligence prior to purchasing any of the above counter.

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