2 possible reasons why ThaiBev keeps F&N's slot on SGX

Charoen has 3 months to restore public float.

According to CIMB, last Thursday, TCC Assets and Thai Beverage jointly announced that they intend to keep F&N listed. On Friday, both shareholders received approval from SGX to lift the trading halt of F&N on Monday and for F&N to be given a  three-month period to restore its public float to above 10%.

CIMB noted 2 possible reasons why Chaoren (chairman of F&N) keeps F&N listed:

1) TCC geared up when it spent S$8.5bn to buy 61.7% of F&N. A public listing of F&N will allow TCC’s current stake in F&N to act as better collateral.

2) F&N has better brand value across ASEAN and if the intention is for Thai Beverage to become a regional F&B player, there could be better brand awareness if F&N is kept listed and the other consumer assets are held under F&N.

Here's more:

Thai Beverage’s share price has taken a knock recently as its recent moves were contrary to our investment thesis that Thai Beverage will emerge as a regional  consumer play. If Thai Beverage/TCC meant to assemble a non-alcoholic unit  within Thai Beverage, surely it would have been cleaner if F&N were de-listed.

Also, before this announcement, Thai Beverage sold down its stake in Oishi  from 89.3% to 79.7%. We can understand why Oishi is kept listed – the unit has aggressive expansion plans that require funding, it trades at a high multiple and can be a useful funding source for its own growth. However, keeping F&N listed is a bit strange.

F&N’s value to Thai Beverage clearly lies in the consumer business. Its value to TCC is clearly the property assets. So, breaking up the two parts seem to be the most logical thing to do.

We do not think that investors should dismiss future restructuring even though F&N is staying listed. Keeping F&N listed does not mean that they cannot restructure.

They still can though the key challenge now would be to determine the value of the consumer assets and the property assets and convince minority shareholders (and an independent financial advisor) when asset swaps are carried out at fair values.