BoD of Caramondani believes that PO by C.B Holdings is fair
2/4/2008 9:16
The Board of Directors of Caramondani Public Company Limited states its opinion on the Public Offer of C.B Holdings Limited for the acquisition of up to 100% of the issued share capital of Caramondani Bros Public Company Limited.
Copies of the opinion and the independent expert’s report will be available at the Company’s registered office, Demokritos Building, Flat 14, 11 Mnasiadou, Nicosia.
Subject: Opinion of the Board of Directors of Caramondani Public Company Limited on the Public Offer of C.B Holdings Limited for the acquisition of up to 100% of the issued share capital of Caramondani Public Company Limited.
At the meeting held on March 28, 2008, the Board of Directors of Caramondani Public Company Limited examined the Public Offer Document of C.B Holdings Limited to the shareholders for the acquisition of 100% of its issued share capital at the price of €0.90 per share cash.
Pursuant to article 33(2) of the Public Offering Law 2007, the Board of Directors must prepare a report on its opinion on the Public Offer. The Report must be announced to the CSE and the SEC.
This Report and the independent expert’s Evaluation Report will be available at the Company’s registered office, Demokritos Building, Flat 14, 11 Mnasiadou, Nicosia and the Company’s website, www.caramondani.com.cy.
The final decision on the submission of the Public Offer by C.B Holdings Limited was announced February 4, 2008. The Public Offer Document was approved by the SEC on March 12, 2008. The Board of Directors appointed Horwath DSP Limited as independent experts for the preparation of a report, which will describe whether the proposed consideration is fair and reasonable and whether the calculation basis is fair.
During the aforementioned meeting, the Board of Directors examined the provisions of the Public Offer Document, the financial data and the Company’s prospects as well as the independent experts’ report, decided to propose to the shareholders to accept the Public Offer taking into account the following:
a) In its report, the independent expert supports that the calculation basis used for the determination of the consideration is fair and the proposed consideration is fair and reasonable.
b) The Public Offer is advantageous for the shareholders of Caramondani Bros Public Company Limited, since based on the average closing price of the share for the period of one, two, three, four, five, six, nie and twelve months prior to the official announcement of the submission of the Public Offer, the proposed consideration offers a benefit exceeding the average closing price of the share in the CSE BY €0.22 - €0.28 (32.35% - 45.16%) per share.
c) The possible delisting of the shares of Caramondani from the CSE. With the submission of the PO, C.B Holdings Limited seeks to acquire 100% of the issued share capital of Caramondani. In that case, the Offeror will apply for its delisting from the CSE. Its shareholders will not be able to sell their investment easily.
d) In case that the shares of Caramondani will not be listed in the CSE, its shareholders will possibly have to pay capital gains tax if they decide to sell their shares.
e) The Offeror’s intention as mentioned in the Public Offer Document:
“With the acquisition of Caramondani, the Offeror intends to keep the Company’s main activities in the sectors of electric and mechanical installations, construction of prefabricated houses, repair and sale of containers, construction of climate air-ducts and wholesale and retail trade of electrical appliances, lighting and small vehicles for commercial and private use”.
The Offeror does not intend to:
- Change the composition of the Board of Directors of Caramondani
- Change the existing employment policy.
- Change the use of the Company’s assets.
Taking into account the above and for shareholders’ interest, the Board of Directors decided to propose to the shareholders to accept the Public Offer of C.B Holdings Limited.
Independent Experts’ Report
Horwath DSP Limited submitted its report to the Board of Directors of Caramondani Bros Public Company Limited.
The report refers to the independent expert’s opinion on:
i) The calculation basis used for the determination of the consideration and,
ii) Whether the proposed consideration is fair and reasonable.
The Report of Horwath DSP Limited notes:
“We believe that the use of the stock market value of the shares as a basis for the calculation of the fair value of the shares of Caramondani is the most suitable method since its shares are listed in the CSE. For the purpose of our evaluation, we have expanded the period of calculation of the average closing price of the share to twelve months before the announcement of the intention to submit a Public Offer. The use of the average closing prices in the CSE during the period of twelve months prior to the announcement of the intention to submit a Public Offer is regarded as fair given the prevailing conditions in Cyprus’s stock market. To avoid possible distortions on prices, the choice of the twelve months is fair. The low marketability of the shares in the CSE, however, could have raised questions on whether the trading price of the shares is the CSE is necessarily representative of their real and fair value.
In addition, we believe that the evaluation of the proposed consideration could not have been carried out on the basis of the consolidated net value of the Company’s assets as presented in the audited financial statements as at December 31, 2006 for the following reasons:
i) The assets and liabilities are assessed in their fair values on the basis of the International Financial Reporting Standards and not necessarily on the current values.
ii) It ignores intangible assets such as goodwill and possible future benefits that might result. These factors might be valuable since they contribute to the creation of profits. Also, the fair values used in this method do not represent necessarily the underlying value of net assets for the calculation of the value of its share.
iii) We are not in the position to ensure whether the consolidated net asset value reflects the fair value of all assets at the date of the Public Offer and whether there is any different in its asset since the release of its latest audited financial statements.
iv) We are not in the position to know whether the Board of Directors of Caramondani intends to proceed with any revaluation of assets that might affect the net value of its assets.
v) The net value is usually used as a secondary index for the evaluation of the opportunity cost or for the comparison of alternative choices such as the distribution of a Company’s activities in separate business units.
For the aforementioned reasons, we also use in our evaluation the stock market value of the shares as a basis of calculation in combination with the consolidated net asset value of Caramondani. We don’t use other commonly-accepted methods for the reasons mentioned above.
Given the sector that the Company is actively involved in, we decided that other commonly-accepted methods such as the analysis of the value of shares and the multipliers of comparable companies, are not suitable for the evaluation of the proposed consideration in this case. These methods are suitable for businesses with increasing profits, a business plan and high percentage of expectation.
Irrespective of the above, we must take into account that the long term forecasts are subject to uncertainty. So long as some of the requirements might never come true, the real results might be different from the anticipated results. Such differences, positive or negative, might be significant”.
In its report, Horwath DSP Limited concludes that:
After analyzing (a) the terms and conditions and (b) the reasons, purposes and intentions of the Public Offer, we analyzed the evaluation method used by the Offeror for the determination of the proposed consideration and we evaluated the proposed consideration adopting commonly-accepted evaluation methods.
According to the analysis in chapters 5 – 8, we believe that the proposed consideration at the date of submission of the Public Offer is fair and reasonable.
Opinion of the Board of Directors
Taking into account the independent expert’s report, the Board of Directors believes that the proposed consideration is fair and reasonable and adopts the report of Horwath DSP Limited in it whole.
The members of the Board of Directors (except for Messrs. Gerasimos Caramondanis and Stavros Caramondanis who are persons in agreement with the Offeror) declare that they do not act in agreement with the Offeror on the Public Offer and they are not aware of any other agreements with regard to the exercise of voting rights.
Messrs. Gerasimos Caramondanis and Stavros Caramondanis did not participate in the decision taking.
Intention of Board members who hold shares
Messrs. Andreas Papasolomontos, Costas Charalambous, Georgios Christofi, Panayiotis Christofi and Giorgos Hadjicostas, who hold shares of Caramondani, declare that they intend to accept the Public Offer of C.B Holdings Limited on the basis of €0.90 per share cash.
Mr. Kyriakos Kyriakides does not hold shares.
Copies of the opinion and the independent expert’s report will be available at the Company’s registered office, Demokritos Building, Flat 14, 11 Mnasiadou, Nicosia.
Subject: Opinion of the Board of Directors of Caramondani Public Company Limited on the Public Offer of C.B Holdings Limited for the acquisition of up to 100% of the issued share capital of Caramondani Public Company Limited.
At the meeting held on March 28, 2008, the Board of Directors of Caramondani Public Company Limited examined the Public Offer Document of C.B Holdings Limited to the shareholders for the acquisition of 100% of its issued share capital at the price of €0.90 per share cash.
Pursuant to article 33(2) of the Public Offering Law 2007, the Board of Directors must prepare a report on its opinion on the Public Offer. The Report must be announced to the CSE and the SEC.
This Report and the independent expert’s Evaluation Report will be available at the Company’s registered office, Demokritos Building, Flat 14, 11 Mnasiadou, Nicosia and the Company’s website, www.caramondani.com.cy.
The final decision on the submission of the Public Offer by C.B Holdings Limited was announced February 4, 2008. The Public Offer Document was approved by the SEC on March 12, 2008. The Board of Directors appointed Horwath DSP Limited as independent experts for the preparation of a report, which will describe whether the proposed consideration is fair and reasonable and whether the calculation basis is fair.
During the aforementioned meeting, the Board of Directors examined the provisions of the Public Offer Document, the financial data and the Company’s prospects as well as the independent experts’ report, decided to propose to the shareholders to accept the Public Offer taking into account the following:
a) In its report, the independent expert supports that the calculation basis used for the determination of the consideration is fair and the proposed consideration is fair and reasonable.
b) The Public Offer is advantageous for the shareholders of Caramondani Bros Public Company Limited, since based on the average closing price of the share for the period of one, two, three, four, five, six, nie and twelve months prior to the official announcement of the submission of the Public Offer, the proposed consideration offers a benefit exceeding the average closing price of the share in the CSE BY €0.22 - €0.28 (32.35% - 45.16%) per share.
c) The possible delisting of the shares of Caramondani from the CSE. With the submission of the PO, C.B Holdings Limited seeks to acquire 100% of the issued share capital of Caramondani. In that case, the Offeror will apply for its delisting from the CSE. Its shareholders will not be able to sell their investment easily.
d) In case that the shares of Caramondani will not be listed in the CSE, its shareholders will possibly have to pay capital gains tax if they decide to sell their shares.
e) The Offeror’s intention as mentioned in the Public Offer Document:
“With the acquisition of Caramondani, the Offeror intends to keep the Company’s main activities in the sectors of electric and mechanical installations, construction of prefabricated houses, repair and sale of containers, construction of climate air-ducts and wholesale and retail trade of electrical appliances, lighting and small vehicles for commercial and private use”.
The Offeror does not intend to:
- Change the composition of the Board of Directors of Caramondani
- Change the existing employment policy.
- Change the use of the Company’s assets.
Taking into account the above and for shareholders’ interest, the Board of Directors decided to propose to the shareholders to accept the Public Offer of C.B Holdings Limited.
Independent Experts’ Report
Horwath DSP Limited submitted its report to the Board of Directors of Caramondani Bros Public Company Limited.
The report refers to the independent expert’s opinion on:
i) The calculation basis used for the determination of the consideration and,
ii) Whether the proposed consideration is fair and reasonable.
The Report of Horwath DSP Limited notes:
“We believe that the use of the stock market value of the shares as a basis for the calculation of the fair value of the shares of Caramondani is the most suitable method since its shares are listed in the CSE. For the purpose of our evaluation, we have expanded the period of calculation of the average closing price of the share to twelve months before the announcement of the intention to submit a Public Offer. The use of the average closing prices in the CSE during the period of twelve months prior to the announcement of the intention to submit a Public Offer is regarded as fair given the prevailing conditions in Cyprus’s stock market. To avoid possible distortions on prices, the choice of the twelve months is fair. The low marketability of the shares in the CSE, however, could have raised questions on whether the trading price of the shares is the CSE is necessarily representative of their real and fair value.
In addition, we believe that the evaluation of the proposed consideration could not have been carried out on the basis of the consolidated net value of the Company’s assets as presented in the audited financial statements as at December 31, 2006 for the following reasons:
i) The assets and liabilities are assessed in their fair values on the basis of the International Financial Reporting Standards and not necessarily on the current values.
ii) It ignores intangible assets such as goodwill and possible future benefits that might result. These factors might be valuable since they contribute to the creation of profits. Also, the fair values used in this method do not represent necessarily the underlying value of net assets for the calculation of the value of its share.
iii) We are not in the position to ensure whether the consolidated net asset value reflects the fair value of all assets at the date of the Public Offer and whether there is any different in its asset since the release of its latest audited financial statements.
iv) We are not in the position to know whether the Board of Directors of Caramondani intends to proceed with any revaluation of assets that might affect the net value of its assets.
v) The net value is usually used as a secondary index for the evaluation of the opportunity cost or for the comparison of alternative choices such as the distribution of a Company’s activities in separate business units.
For the aforementioned reasons, we also use in our evaluation the stock market value of the shares as a basis of calculation in combination with the consolidated net asset value of Caramondani. We don’t use other commonly-accepted methods for the reasons mentioned above.
Given the sector that the Company is actively involved in, we decided that other commonly-accepted methods such as the analysis of the value of shares and the multipliers of comparable companies, are not suitable for the evaluation of the proposed consideration in this case. These methods are suitable for businesses with increasing profits, a business plan and high percentage of expectation.
Irrespective of the above, we must take into account that the long term forecasts are subject to uncertainty. So long as some of the requirements might never come true, the real results might be different from the anticipated results. Such differences, positive or negative, might be significant”.
In its report, Horwath DSP Limited concludes that:
After analyzing (a) the terms and conditions and (b) the reasons, purposes and intentions of the Public Offer, we analyzed the evaluation method used by the Offeror for the determination of the proposed consideration and we evaluated the proposed consideration adopting commonly-accepted evaluation methods.
According to the analysis in chapters 5 – 8, we believe that the proposed consideration at the date of submission of the Public Offer is fair and reasonable.
Opinion of the Board of Directors
Taking into account the independent expert’s report, the Board of Directors believes that the proposed consideration is fair and reasonable and adopts the report of Horwath DSP Limited in it whole.
The members of the Board of Directors (except for Messrs. Gerasimos Caramondanis and Stavros Caramondanis who are persons in agreement with the Offeror) declare that they do not act in agreement with the Offeror on the Public Offer and they are not aware of any other agreements with regard to the exercise of voting rights.
Messrs. Gerasimos Caramondanis and Stavros Caramondanis did not participate in the decision taking.
Intention of Board members who hold shares
Messrs. Andreas Papasolomontos, Costas Charalambous, Georgios Christofi, Panayiotis Christofi and Giorgos Hadjicostas, who hold shares of Caramondani, declare that they intend to accept the Public Offer of C.B Holdings Limited on the basis of €0.90 per share cash.
Mr. Kyriakos Kyriakides does not hold shares.
