China Animal – Delisting or no delisting?

On 26 Sep, before market opened, China Animal (“CAL”) announced that it has entered into a conditional Subscription Agreement with two new investors, Themes and SEB Listed PE Fund for subscription of Subscription Shares and Warrants. If the conditions to the Subscription are satisfied, this would raise an aggregate amount of S$47.7m to be primarily used to partly fund the Possible Delisting Offer.

More than 3 months have passed (and pertaining to the delisting), CAL had updated investors that “the arranging of third-party financing for the Possible Delisting and other associated workstreams are now at an advanced stage and are ongoing as at the date of this announcement” I believe most investors have already given up on this as news / rumours on CAL’s potential delisting started as early as May 2011. On 18 Oct 2011, CAL announced that a potential delisting is one of their corporate evaluation considerations. On 22 May 2012, CAL formally announced that it is seeking a potential delisting with a cash exit offer of $0.300 / share, subject to several conditions herein$file/Chinanimal_E_Ann.pdf?openelement
Personal takeaways to this string of developments:
1.    After the 26 Sep announcement, CAL seems to be a step closer to delisting (but not confirmed) as it signifies
a) Company manages to secure some funding for the potential delisting exercise, subject to the conditions in the subscription agreement;
b) Management’s continuous efforts and determination to delist from Singapore;
2.    There is a Long Stop Date 31 Mar 2013 where the Subscription Agreement will lapse if the conditions below are not fulfilled.
Company has to obtain
(i) the approval of its Shareholders in general meeting for the Possible Delisting and the Possible Delisting Offer; and
(ii) the Listing Approval.
CAL signed this agreement on 25 Sep 2012 and they provided the Long Stop Date to be half a year later on 31 Mar. It seems to me that they are reasonably confident that it can be done. If not, all their efforts (spanning more than a year or 1.5 years in my estimate) would go down the drain.
If my above guess is true, then CAL should announce they manage to secure funding latest in the next couple of months lest there is not enough time to convene a Shareholder meeting and seek the various authorities’ approval etc.
Do note that the above is my personal opinion on the matter and is highly speculative. It is not suitable to all readers as the risk profile of each person differs. If the subscription agreement lapses or if they drop their delisting proposal, CAL share price may plunge.
Readers who want to research more into CAL can email me at I will send you some analyst reports and financial statements on CAL.
*This is an amended version which I sent out to my clients on 5 Jan 2013 where it was trading around $0.250.


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