MCS Steel Non-Voting DR T.MST.UN

Primary Symbol: MSTUF

M.C.S. Steel Public Company Limited is a Thailand-based steel fabricating company. The principal activities of the Company and its subsidiaries are production and distribution of structural steel products for building construction, and residential development projects for sale. It is a large steel structure manufacturer, especially steel beams and columns for the construction of large high-rise buildings such as office buildings, hotels, shopping malls, and others. There are two types of steel structures produced by the Company: the steel structure used as a column-box and the steel structure used as beams, which are important components of the building. Its subsidiaries include Tanaka Welding Center Co., Ltd., which is focused on welder training and real estate; M.C.S.-Japan Co., Ltd., which is engaged in the design and production of structural steel products; and M.C.S. Steel-Xiamen Co., Ltd., which is engaged in the production and distribution of structural steel products.

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MCS Steel Non-Voting DR

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Post by retiredcfon Jan 20, 2017 8:37am

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Post# 25732774

RBC

The $53 million break fee is what makes another offer at best, a low possibility.
And it goes without saying that the $21.42 figure will change daily with the exchange rate. GLTA

January 19, 2017

Milestone Apartments REIT

Starwood Capital Group makes all-cash offer at US $16.15/unit

First impression:

Sector: Real estate, REITS & Hospitalities

Top Pick

TSX: MST.UN
Price: CAD 19.66
All market data in CAD; all financial data in USD.

Through a “friendly” and directly-negotiated deal, MST has agreed to be acquired by Starwood Capital Group for US$16.15/unit, all cash. We do not rule-out a higher offer. But, we see this as a low probability.

Offer highlights:

Unitholders to receive US$16.15/unit cash, equating to ~C$21.42 based upon a C$/US$ exchange rate of $1.326.
Transaction is supported by MST’s Board and senior management which collectively own an effective 14% stake in the REIT.
The offer is subject to the approval of at least 66 2/3% of the votes cast by unitholders and requires approval from simple majority of the votes cast by unitholders other than those units owned by MST’s CEO and affiliated entities.
The offer is not subject to a financing condition.
The Acquisition Agreement provides for a US$53MM break fee payable

to Starwood in the event of a superior offer. The break fee equates to

3.6% of the equity value of the offer (US$1.48 billion).
An offer circular should be available within 2-3 weeks. The unitholder meeting should follow within 60 days thereafter and the transaction closing (subject to unitholder approvals) could therefore be an early Q2/17 event. Within the circular, we seek details relating to potential tax matters (e.g., potential for allocated recapture income, allocated capital

gains and any withholding tax implications).
MST expects to continue paying its monthly distributions (US$0.05/unit

per month) in the normal course through to closing.

Valuation metrics:

MST cites a transaction cap rate of 5.8% and average value per suite ~US $120,000, which compares to the Q3/16 fair-value cap rate of 6.3% and an implied average value of US$110,000 per suite. We will triangulate with our forecasts/valuation metrics in due course.
The US$16.15 offer price is an 8% premium over the Q3/16 IFRS BVPU of US$14.90; implying a portfolio premium of ~4% on gross asset value