The Board of Directors of XENOS TRAVEL PUBLIC LIMITED submits
its opinion on the Public Offer of SOSTROM SERVICES LIMITED and
GRANDWIND LIMITED for the acquisition of up to 100% of the issued share capital
of XENOS TRAVEL PUBLIC LIMITED.
Copies of the report as well as the evaluation report
of the independent experts will be available at the Secretary’s office, 22B
Evanthous, 1101
Opinion of
the Board of Directors of Xenos Travel Public Ltd on the mandatory public offer
of Sostrom Services Ltd and Grandwind Ltd for the acquisition of up to 100% of
the issued share capital of Xenos Travel Public Ltd
At the meeting held on Wednesday, March 10, 2010, the Board of Directors
of Xenos Travel Public Ltd examined the content of the Public Offer Document of
Sostrom Services Ltd and Grandwind Ltd to the shareholders of the company for
the acquisition of up to 100% of the issued share capital of the Company at the
price of €0.01 per share cash.
Pursuant to article 33(2) of the Public Takeover Bid Law 2007,
N.41(I)/2007, the Board of Directors ought to prepare and publish a document on
its opinion in relation to the Public Offer.
This document is announced to the CSE and the SEC.
The final decision for the submission of the Public Offer by the
Offerors was announced on January 14, 2010.
The PO Document was approved by the Cyprus Securities and Exchange
Commission on February 10, 2010 and was published on February 18, 2010.
Pursuant to article 33(6) of the Law, the Board of Directors appointed
BDO Philippides Ltd as independent expert for the preparation of an evaluation
report, which will state whether the proposed consideration is fair and
reasonable as well as its opinion on the calculation basis used for the
determination of the consideration.
After examining the content of the PO Document, the Board of Directors
took into account the shareholders’ interests, the Offerors’ purposes and
intentions and the Company’s prospects and financial data as well as the
expert’s evaluation report.
As for the proposed consideration of €0.01 per share, the Board of
Directors took into account the following, as these are included in the Public
Offer Document:
- The mid closing price of the share on the first business day of each
month for the past 6 months prior to the official announcement for the
submission of the Public Offer as well as the mid closing price of the share on
the last business day prior to the announcement. The proposed consideration of €0.01 per share
represents a discount that fluctuates between 33.3% and 71.4% from the mid
closing price on the first business day of each month for the past six months
prior to the official announcement of the Public Offer.
- The volume of transactions of the share in 2008, 2009 and 2010 (until
the date prior to the official announcement for the submission of the
- The net asset value per share.
According to the audited financial statements for the year ended
December 31, 2009, the net asset value per share stood at €0.012 and as a
result, the proposed consideration of €0.01 per share represents a discount of
16.7%. In addition, according to the net
asset value per share as at 30/6/2009, which stands at €0.004, the proposed
consideration of €0.01 per share represents a premium of 150.0%.
- The purposes and intentions of the Offerors, as included in the Public
Offer Document:
The Offerors’ intentions include the change of the Company’s main
activities via the sale of the tourist activities and the Company’s involvement
in the sector of trade activities in order to achieve improved margins of
profit and to undertake more controlled business risks.
The Offerors’ intention is to hire or purchase a property in
The adoption of the Offerors’ intentions requires the finding if a
buyer, who will acquire the tourist business of the Company in a price and
terms that will be to the benefit of the Company. If this is not feasible, the Offerors’
intention is to take measures that will be deemed necessary for the
strengthening of the existing activities until the conditions for the sale of
the tourist activities mature.
The Offerors intend to sell all Company’s assets concerning directly and
indirectly the tourist activities of outgoing tourism within the framework of
the change of its activities mentioned above.
The Offerors intend to change the employment policy of the staff, since
the achievement of the agreement for the sale of its business is expected to
include the Company’s staff.
The Offerors intend to change the composition of the Board of Directors
so that it depicts the different share composition.
The Offerors do not intend to allocate any special benefits to the Board
members.
The Offerors intend, if required, to amend the Articles of Association
so as to be in line with its new activities.
In case that via the Public Offer they acquire more than 90% of the
issued share capital, the Offerors do not intend to stop the trading of the
share in the CSE and intend to take all necessary measures in order to keep
their trading in the CSE. Also, the
Offerors do not intend to exercise a squeeze out.
Independent expert’s report
Independent expert, BDO Philippides Ltd, submitted an evaluation report
to the Board of Directors, in which it states its opinion on:
(i)Whether the proposed consideration is fair and reasonable and
(ii) The calculation basis used for the determination of the proposed
consideration.
In the evaluation report, the independent expert notes:
“It has been observed that the proposed consideration is lower than the
closing price in the past 12 months prior to the date of submission of the
“We may judge that the share of Xenos 12 months prior to the
announcement was not tradable. In
November 2009, the share’s marketability increased up to 51%. This is attributable to the transaction in
which the Offerors acquired 51.09% of Xenos shares.
The announcement of the
It is also worth noting that 65.39% of the shares is held by 4
shareholders. This makes the
marketability of the share even more difficult”.
“The evaluation of the proposed consideration on the basis of the stock
market value in Part 6.1 showed that the revised NAV per share as at 30/6/09
was 20% higher than the proposed consideration, while the readjusted NAV per
share as at December 31, 2009 was 100% higher than the proposed
consideration. According to the indicative
results for the year ended December 31, 2009 and the indications of the
Managers as to the fair value of properties, the net liability per share as at
December 31, 2009 stood at €0.012”.
In the evaluation report, the independent expert concludes that:
“The NAV per share was used as a basis for the evaluation of the
proposed consideration. The net asset
value method is an advisable evaluation basis in several sectors of economic
activity, including the tourist sector, especially in cases that the company is
loss making”.
“Also, NAV per share is regarded as advisable evaluation basis in cases
that it is very difficult and subjective to make an estimate of the trading
value on the goodwill of the Company’s activities, and when the fair value of
the assets is estimated that it does not fifer significantly from the
readjusted book value”.
“The use of the net asset value method is exceptionally important in
this case, since the business and financial data of the Company make the use of
other methods difficult and is a fair basis under the circumstances”.
As for the low marketability, it is a significant factor mostly in
capital markets of limited depth, such as the Cypriot”.
The evaluation of the proposed consideration on the basis of the stock
market value in Part 6.1 showed that the revised NAV per share of Xenos as at
30/6/09 was 20% higher than the proposed consideration, while the readjusted
NAV per share as at December 31, 2008 was 100% higher than the proposed
consideration. According to the
indicative results for the year ended December 31, 2009 and the indications of
the Managers as to the fair value of properties, the net liability per share as
at December 31, 2009 stood at €0.002.
The examination of the volume of transactions in part 6.2 indicated the
low interest in Xenos share in the past few months. The low marketability in combination with the
high concentration of shares to few persons shows the difficulty of the
shareholders to proceed with sales, which might lead to a variation in the
price of the current value.
The examination of the stock market value in the past 12 months showed
that the closing price of the share was constantly higher than the proposed
consideration. Also, the annual average
closing price was €0.03, that is, 300% higher than the proposed consideration
and was maintained to those levels until February 26, 2010.
Taking into account all the above:
The view of BDO Ltd on the basis used by the Offerors for the evaluation
of the proposed consideration is that it is suitable and adoptable. However, the Board of Directors is urged to
include the stock market value method.
The opinion of BDO Ltd is that the proposed consideration can be
regarded as fair and reasonable at the date of the submission of the
Agreements in relation to the Public Offer
As for the agreements in relation to the Public Offer pursuant to the
Public Offer Document, there is no agreement or settlement on the basis of
which any shares that will be acquired with the acceptance of the Public Offer
will be transferred to any other person rather than the Offerors.
Opinion of the Board of Directors – Statements of Board members
Taking into account the evaluation report of BDO Philippides Ltd, the
Board of Directors believes that the proposed consideration is fair and
reasonable at the date of its submission.
However, the increase in the price of the share after the announcement
of the
On this basis, the Board of Directors cannot recommend to the
shareholders the acceptance of the Public Offer, giving emphasis to the risks
that might emerge in relation to the maintenance of the share price to
significantly higher levels that the proposed consideration, mostly in cases of
disposal of a large number of shares.
As for the strategic plans of the Offerors, as analyzed in the Public
Offer Document, they are at an initial stage and might be subject to the approval
of the competent authorities and the general meeting of the shareholders and do
not change the opinion of the Board of Directors in relation to the Public
Offer.
The members of the Board of Directors declare that they do not act in
agreement with the Offerors on the Public Offer and they are no aware of any
other agreements in relation to the exercise of voting rights. Also, they declare that there is no conflict
of interest among the Board members or between the Offerors. It is noted that the Board members do not
hold the Company’s titles and there is no irrevocable commitment or letter of
intent for the transfer of the titles from the Company or any other persons
acting in agreement with it.
The Board of Directors stresses that the shareholders must take their
own professional advice in relation to their decision to accept or not the
Public Offer. In any case, it is
stressed that the Public Offer is a proposal and does not aim to prejudice the
shareholders to accept it and the responsibility is entirely theirs.
It is noted that the current document and the Evaluation Report will be
available in printed form during the period of acceptance at the Company’s
registered office,