Brief post on Dragon Ukranian Property.
I bought this in March 2018 for c18p per share. I had a distribution of .09 USD per share or c 7p. So even if this goes through I am more-or-less flat. It’s actually worse than that though. Since I bought this in March 18 my portfolio is up 16%, so this has been a net detractor.
Q1 2020 hedge fund letters, conferences and more
The majority shareholder is offering 10p a share.
According to the H1 annual report, this has cash of c $4.9m or $.045 or c3.6p per share. The stake in Arricano is potentially worth $3m.
NAV is $36m. No debt, they are offering c$13.5m.
If I need to spell it out for you, this is not a good deal.
Dragon Ukranian Property: An Illiquid Stock
They say it is to save c£240k a year in costs. And that the stock is illiquid. I would rather lose $240k per year than over half the NAV! I knew it was illiquid going in.
Not keen to hold an unlisted Ukranian company so, if the vote passes I will likely sell. This could have been far worse, but I think it tarnishes the reputation of Mark Iwashko (director), Aloysius Wilhelmus Johannes van der Heijden (Non-executive director) and in particular Tomas Fiala. Dragon Capital could easily have made a fair offer – say 15-20p a share and still made money on this. Remember they are only buying 40% of the shares. The fact that they didn’t make a fairer offer, to me, indicates they are not people one should look to do business with in future.
The board should not have approved this. The non-execs should have made Dragon capital formally requisition a meeting. This would stand up for the long-suffering minorities such as myself !
To vote No on the delisting you need to get your broker to fill out a form of proxy – do it now if you can. I believe the failiure of the company to allow voting via CREST shows the weakness of minority protection in the UK – clearly all shareholders should be allowed to vote in the easiest way possible, particular given the corona circumstances.
There is a possibility that the vote on this could fail. Remember they only own 60% of the shares so your vote is not futile.
Article by Rob Mahan, Deep Value Investment Blog
