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ESR Cayman scraps VLNs as part payment for ARA Asset Management

The Edge Singapore
The Edge Singapore  • 2 min read
ESR Cayman scraps VLNs as part payment for ARA Asset Management
ESR Cayman scraps plans to issue VLNs opting for consideration shares and US$519 million cash as payment for ARA
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ESR Cayman announced on Oct 12, that it will not be issuing vendor loan notes (VLN) to sellers of ARA Asset Management. Instead these would be replaced by ‘consideration shares’ to the seller or consideration recipient.

On Aug 4, ESR Cayman had announced that it planned to acquire ARA Asset Management for US$5.19 billion. Of this, US$519 million would be in cash, US$4,286 million would be by the issue of 1,234,438,841 consideration shares at a price of HK$27 per share and US$387 million would by the issue of 111.46 million VLNs to be eventually converted into consideration shares.

On Aug 24, there was a minor amendment to the agreement with ESR Cayman paying US$519 million in cash, and US$4,673 million by the issue of 1,345,898,078 consideration securities, with the allocation between consideration shares and consideration VLNs to be determined in accordance with the agreed calculation methodology. In the latest announcement there will be no issue of VLNs.

On Sept 30, ESR Cayman announced that the circular for the EGM would be delayed by three weeks, from Sept 30, to Oct 22. The EGM would be held by Nov 15. The delay is to allow sufficient time for the company to prepare the circular, including the accountants’ report on the ARA Group, the company said.

ESR Cayman closed at HK$23.05 on Oct 12, following share buybacks on most trading days this month, including on Oct 11, when the company bought 750,000 shares at prices between HK$22.50 and HK$23.05. The share buyback programme was opportune.

Following the Aug 4 announcement, ESR Cayman shares dived and would have fallen to a level which could have triggered a break clause. However, the share price recovered as the share buyback programme kicked in.

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