Ocean Wilsons (holdings)... Share Discussion Threads

[last of the mohicans] 21/10/2024 17:51

Extrader, a bid for OCN would have been possible, but there would be down sides to it.

You have to remember the portfolio has private equity investments in it which are much longer term in duration (usually 5 years plus to maturity) plus there is like $50M + of future commitments to these private equity fund managers that the directors have already agreed to !

So any potential buyer of OCN can't just liquidate the portfolio & walk away with just Wilson & Sons they are going to have a fair chunk of cash tied up for years in the private equity investments & trying to get out early will see significant losses on those investments.

Given the terrible overall performance of the private equity investments to date there is a risk that they don't even get there money back holding them to maturity!

-------------

I would say a purchase of OCN was less punitive for OCN shareholders because OCN is not selling Wilson & Sons & thus would not be liable to Capital Gains tax in Brazil over the transaction.

But each OCN shareholder would then be subject to there own capital gains tax etc (which we are going to be anyway).

They could have offered 3 year lone note or such like that would allow shareholders to spread out the gains tax payable but given the amount is down to £3,000 annually for UK Residents now, its not going to be much of a saving.

The only thing that can be done is for shareholders to sell (generate losses) elsewhere in there portfolio's over the rest of this tax year & next to offset as much of the Capital gains tax liabilities that they'll have that way.

LOTM

[last of the mohicans] 21/10/2024 17:32

From Wilson & Sons announcements



➢ On October 21st
, 2024, SAS Shipping Agencies Services Sàrl (“SAS”) and OW Overseas (Investments) Limited (“OW” or the
“Seller”) entered into an agreement (“Transaction”) whereby:
‒ SAS will acquire all shares of Wilson Sons S.A. (“WS” or the “Company”) currently held by OW, totaling 248,664,000 shares or
56.47% of the Company’s current outstanding capital
‒ Following the closing of the Transaction, SAS will launch a mandatory tag-along tender offer for all minority shareholders of the
Company, for the same price and under the same terms offered to OW under the Share Purchase Agreement, following the best
governance practices as WS is currently listed on the Novo Mercado segment of the Brazilian stock exchange (B3)
Purchase Price
➢ Locked-box mechanism with Permitted Dividends as described below
➢ Price per share: R$17.50 paid at closing
‒ Implied EV/EBITDA multiple: 8.7x ex-IFRS16 @stake 2Q24LTM(1)
‒ Implied premium: +6.3% over the unaffected closing price of R$16.46 on October 16th
, 2024(2)
; and +66.3% over the unaffected
closing price of R$10.52 on June 9
th
, 2023(3)
➢ Additional shareholder value in the form of Permitted Dividends(4) of up to US$0.31/share, paid each quarter (US$0.06/share for 3Q24
and US$0.05/share from 4Q24 onwards) on a pro rata basis until closing
➢ Dividends in excess of Permitted Dividends will result in a Purchase Price deduction
Conditions
Precedent
➢ The closing of the Transaction is subject to the satisfaction of customary conditions for this type of Transaction, including, but not limited
to, approvals from Brazilian antitrust authority (CADE) and Brazilian National Waterway Transportation Agency (ANTAQ

--------------------

So Yes Wilson & sons shareholders have been given the exact same offer as we got.

& We are subject to currency movements as to the true value of the offer over the next 9 month's

8.7X multiple isn't high & that will drop when the 3rd Quarter numbers come out, not to mention the 4Q ones.


LOTM

[varies] 21/10/2024 17:15

extrader
An outright bid for OCN whilst it still holds the Wilson Sons stake would indeed be feasible but the risks and complications might deter most buyers.
OCN stripped of WS and reduced to cash and marketable securities might be attractive to an investment trust wishing to increase its size without borrowing or seeking funds from its own shareholders. I doubt if an investment trust would want to assume the task of selling off WS.
Furthermore OCN seems committed to this sale.
Today's sharp fall in the Wilson Sons share price (echoed this afternoon at OCN) reminds us that we have a long wait ahead.
Has an offer of 17.50 Reals been made to the other shareholders in WS ?
It would be interesting to know if Mr. Salomon and Mr. Townsend wish to continue as fund managers.

[extrader] 21/10/2024 15:27

.."The buyer could exact a discount and still leave us, the minority shareholders, better off as could defer our liability to CGT..."

I'm ignorant of these matters. Would an outright bid for OCN itself - 'asset-stripping' and onselling the Wilson Sons stake AND the investment portfolio subsequently to trade buyers of each - be (a) feasible and (b) tax-efficient (or, at least, less punitive)?

'Asking for a friend'

TIA and ATB

[flyfisher] 21/10/2024 15:23

Wilsons down 10% on Brazil market.

Whilst the board may invite views from shareholders, it remains that OCN and Hansa are effectively a family trust and will go in the direction which will benefit themselves.

[meanreverter] 21/10/2024 15:05

Edison's report on this deal doesn't add any insight, but here it is FWIW:

hxxps://www.edisongroup.com/research/sale-of-wilson-sons-investment/34063/?j=275001&sfmc_sub=12772501&l=716_HTML&u=8249904&mid=536001663&jb=1

[varies] 21/10/2024 13:31

LOTM
Thank you for your interesting comments.
The statement issued by OCN today invites shareholders to express their views on the future of the company after the sale of its stake in Wilson Sons.
I will write to the directors pointing out my large contingent liability to CGT, a position in which many others will find themselves, and suggesting (on the lines of my earlier post today)that they should invite a large investment trust to make an offer in its shares for ours in OCN.
OCN's assets after receipt of the net proceeds of the Wilson Sons sale will be about £710 million, say £20 per share, all in cash or marketable securities and this would be a manageable acquisition for several UK quoted investment trusts. The buyer could exact a discount and still leave us, the minority shareholders, better off as could defer our liability to CGT.

[xxx] 21/10/2024 13:26

Completely agree with the idea that we would be better off as holders of Wilsons and liquidating the investment portfolio. The problem is that the board see it as their enterprise, which external shareholders [us] can hitch a ride on if they are agreeable to the bod's terms.

See the Hansa agm meeting if you have doubts.

[joedjoed] 21/10/2024 13:16

Does this drive a merger between HANSA and OCN? After the sale of OW, HANSA ends up owning the rump of OCN's fund portfolio and receives a cash distribution. In which case the less obvious trade is to anticipate the discount on HAN/A to tighten.

[last of the mohicans] 21/10/2024 11:44

Hi varies,

" The Ocean Wilsons' Board of Directors (the "Board") is of the opinion that the Transaction is in the best interests of Ocean Wilsons' shareholders as a whole. "

Given they knew I square were considering making an offer in the next 12 days, it seems very foolish to enter an agreement in the meantime that you can't then get out of !

But you might be right they may have committed themselves to this deal (unless of course we have the chance to vote it down !)

So if I square put a higher offer on the table to the other Wilson & Sons shareholders, that makes the OCN board of directors position almost untenable.

LOTM

[varies] 21/10/2024 11:26

LOTM
Can there be a counter offer ? Is OCN not now committed to this deal ?

[last of the mohicans] 21/10/2024 11:16

Lets hope there is a counter offer ......... then the OCN directors will be under real pressure

LOTM

[last of the mohicans] 21/10/2024 10:58

Hi xxx,

No certainly wasn't me "who said that some members of the family wanted more financial independence from OCN ?

LOTM

[last of the mohicans] 21/10/2024 10:55

varies, flyfisher, xxx, extrader

I have to say its an awful deal & I would turn it down in a flash.

Quite frankly the OCN board of Directors & the 2 families have been misleading us minority shareholders for years now & should be ashamed of themselves.

Expressing the true NAV of OCN as being X when they were very much aware that there would be a colossal tax bill to pay when Wilson & Sons were sold & not disclosing that fact in any of the annual or half yearly reports.

We'd be far better of holding onto Wilson & Sons & banking the dividends (then paying all of it out to shareholders) & disposing of the investment portfolio & paying that cash out to shareholders.

Alternatively they can issue the Wilson & Sons shares to each of us individually & then we can decide whether to accept the offer or not & the tax issue would be to us individually not OCN.

LOTM

[xxx] 21/10/2024 10:50

At the moment we pay a board,who employs a manager to manage other funds invested in businesses. Ie 3 layers of costs for below average returns.

It is a subsidised employment scheme for members of the family.

If we, the external shareholders form a view that all of the distributions from Wilsons should be paid to shareholders pro rata, the management will listen, as the vote requires 75% and the board currently has ~50% wrapped up.

@LOTM was it you who said that some members of the family wanted more financial independence from OCN ?

ps. Agreed the price looks low bearing in mind growth phase, is there a chance of a new bidder entering the fray and what are the costs ?

[last of the mohicans] 21/10/2024 10:41

JimmyWilson612,

I'm sorry but your wrong & it is yet another trick of the wording used by OCN.

Wilson & Sons shares went ex-dividend on 17th October, that payment was already in the share price & coming to OCN anyway.

If the profits allow Wilson & Sons can pay up to $22M per quarter, so that will hopefully apply in Q1 & Q2 of 2025.

The discount to NAV won't reduce it will increase that's a certainty.

LOTM

[jimmywilson612] 21/10/2024 10:29

I think it's a good deal for shareholders...

We are still receiving $22M a Q in dividends, so that'll add another $60M to the pot.

I agree investment portfolio is boring, but should reduce the current circa 25% discount to NAV that you're currently buying today

[varies] 21/10/2024 10:27

On reflection I think that the most satisfactory outcome for us minority shareholders would be an all share offer for OCN by some large investment trust, eg the new combination of Witan and Alliance.
No charge to CGT would arise on our accepting this and the investment trust would get its hands on a large pile of cash and marketable investments, presumably at a discount. We would probably suffer a loss of income but this seems inevitable.
The Salomon and Townsend families could then retire from the scene.

[phil140158] 21/10/2024 10:26

Thanks for the info guys, I thought my figure seems a bit high!

[flyfisher] 21/10/2024 10:24

A year ago it was rumoured by Bank Bradesco that MSC was a bidder at 5bn real. A year later it is 4.35bn real and the brazilian currency has weakened against sterling by about 18%.

The residual portfolio is almost a copy of what hansa holds and hansa trades on a 40% discount to nav. OCN intends to use some of the cash to add to the portfolio.

I did not see this as good news.

[varies] 21/10/2024 10:12

For me the terms of this deal are disappointing.
OCN shareholders stand to receive a special dividend in 12 months time or capital distribution.
On either of these we are likely to be taxed at over 20%, perhaps over 40%. Then we will be left with a very unexciting investment portfolio which is essentially a fund of funds with much duplication of management charges.

samsj makes an interesting point about minority holdings and I will follow his link but I doubt if we, the minority holders in OCN, could prevent this deal proceeding and whether it would be wise to do so.

[jimmywilson612] 21/10/2024 09:34

Phil;

In Today's RNS - it mentions $593M Dollars / £455M Sterling Net after taxes are paid.

Investment Portfolio in at June 2024 $319M Dollars / £244M Sterling

So based on Today's Annoucement'

Wilson Sons Sale + Investment Portfolio = $912M US / £699M Sterling.

Market Cap Currently = £535M (1500p a share).
NAV = £699M or Circa £19.80 per Share.

[allstar_07] 21/10/2024 09:34

£444m after cgt works out to £12.70 p/s

[phil140158] 21/10/2024 09:15

Livingstone - Stockopedia says there are 35 million shares, so the sale price works out at £21.86 per share at todays exchange rate, does that look about right? Thanks. Phil