Martin Lee @ Sg
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Suspension of Pertama

Pertama is no more. 🙁

Ok, I’m exaggerating it a little.

Back in June 2011, Pertama had proposed a delisting of the shares (at $0.65 a share) as it saw no need to maintain a listing status. The cash flow of the business was good, and it had no plans for any capital raising.

The free float of the shares was also very small with Harvey Norman Singapore Pte. Ltd. (“HNS”) and HNS’s subsidiary, Harvey Norman Ossia (Asia) Pte Ltd (“HNO”) collectively holding approximately 83% of the total number of issued shares. FMR LLC and Edward C. Johnson 3rd hold approximately 9%  of the total number of issued shares.

The proposal was shot down by minority shareholders at the EGM, and the shares continued to trade at a price lower than $0.65 with low transaction volumes.

The free float of the shares was in fact less than 10%, which meant that the shares had to be suspended from trading unless the company could increase the percentage of free float in the market.

As the majority shareholder had no intention to sell his shares and the company had no mandate to do a share placement to issue more shares, the shares of Pertama would have to be suspended from trading (starting from today).

A lot of retail investors would worry about such a suspension as they would not be able to get out of their positions.

Not me.

After my previous sucking thumb exercise and failure to add to my original purchase back in 2001, I did not hesitate this time. I managed to accumulate more Pertama shares since the general offer failed (By the way, this is one advantage of being a retail investor because an institutional investor will not be able to find enough shares to buy to make the exercise worthwhile).

As the majority shareholder Harvey Norman had made a previous exit offer, they are not allowed to make another one within a 12-month time frame. They had tried asking for a waiver from Securities Industry Council (SIC) to waive this requirement for them to make a voluntary general offer for all shares that they do not own but was rejected by SIC.

What is likely to happen is that Harvey Norman will make another general offer after the 12-month moratorium was up. And then Pertama will finally be delisted.

Such a buy and hold strategy (without being able to sell) might bore a lot of investors to tears, but having seated on this position for ten years, I’m happy to wait for another year. 🙂

Leave a Comment:

1 comment
James says 9 years ago

Buy & Hold or buy & hope strategy is only good for stocks that pay consistent high dividends or at least above average dividends > bank interest for fixed deposit. Any time the said dividend is reduced drastically or removed, it’s time to dispose off the stock.

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