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Just exited my Dragon Ukrainian Property position at a touch over 15p.  This is a pretty disappointing result.  It is far less than the company’s NAV which is more than double this amount.

The tender offer has been accepted by over 50% (59.61%) of the shareholders at 15p.  This means it will happen.  The remaining shareholders have until August the first to tender (brokers may have earlier deadlines)   If more than 75% accept it’s likely the company will be delisted, if 90% accept the minority gets squeezed out.

Looking at who owns what, 90% will not be achieved and 75% seems very unlikely, but not impossible.

I think they were able to achieve this in part due to their RNS saying they would put another $5m into the oblon residences – drawing out capital returns.  This could, of course, be a bluff on the part of management.

One of my few investing rules is I don’t go into companies with dominant shareholders (45%+).  As a little guy I simply do not trust I will be treated fairly so I stay away.  This has both saved and cost me quite a bit over the years…  As with all rules, I will bend on occasion, but not this time.

I could be missing out – one likely option is another offer at a fairer price in 12-24 months time.  Another option is a change in investing mandate/fall in the share price, though I think this is less likely.  I suspect the remainder will be tightly held so there will be few interested sellers. Ukraine is a volatile environment to hold and I wouldn’t want to hold long term at this price, even though most of the property is in the safer east.   I’m also increasingly nervous about delisting.

Not overly happy at this – I dont enjoy selling things for less than they are worth but in this case I think its the best way to proceed.  Best way to do it is look for a bid north of 15p, or if you have to tender.

Made about 14% on my post in May.

https://deepvalueinvestments.wordpress.com/2017/05/31/dupd-almost-free-put-option-on-offer/comment-page-1/#comment-403

I am up 33% against the post in February 2016.  This isnt as good as it sounds as I had to wait much longer after the capital return…

https://deepvalueinvestments.wordpress.com/2016/02/05/dupd-it-trading-at-near-cash-value-discount-of-75/

I am struggling a bit for new ideas with markets looking pretty fairly valued.  Ideas are, as ever, appreciated.

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