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"I am a BLOGGER NOT an expert. This is a BLOG not a 'go-to' website for official information. I represent no one's view save my own. I have neither legal nor financial training, nor do I have anything to do with the real estate industry. My understanding of the Collective Sale Process is from a layman's position only. My calculations, computations and tables are homespun and may contain errors. Please note that nothing in this blog constitutes any legal or financial advice to anyone reading it. You should refer to your lawyer, CSC or financial adviser for expert advice before making any decision. This disclaimer is applicable to every post and comment on the blog. Read at your own risk."
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There is one thing worse than an Enbloc ----- and that is an Enbloc done badly. Since the majority have the necessary mandate to sell, then they owe it to all SPs to make a success of it. Minority SPs can only watch and wait, if they sell then lets pray it's at a price we can move on with, if they don't sell, then we are happy to stay for a few more years.

Beta Sum and TC

The Beta Sum is a major minority objection at the STB.

Facts:
The SC gave $405 million as the Sale Price in their Application.
It comprises of $395 million + $10 million
Stamp duty is paid on $405 million
The distribution of this Beta sum is at the discretion of the SC.
.
Only 239 (out of 560) SPs gave in partial or full financial details.
The Tabulation for Alpha and Beta is therefore incomplete and the final figures remain unknown.
SPs do not know what their sale proceeds will be.
.
Only Alpha (up to 1% of sale proceeds to cover financial loss) was mentioned in the CSA.
Beta first appeared on 27th March 2007, after the sale.
.
The remainder of Beta sum is divided between those owners who did not claim Alpha or Beta (ie Omega owners).
There is over $8 million to be divided amongst the Omega owners.
By this distribution method, if 559 owners claim $1000/- then the remaining owner would get $9.44 million.
The method is clearly flawed, as pointed out by a panel member.
.
The Sale committee applicant admitted on cross examination that the Beta sum distribution was "unfair".
.
The SC cannot change the method of distribution unilaterally.
The Buyer has refused to amend the S&P to change the method of distribution of Beta.
The SC is stuck with this flawed method of distribution.
.
The SC, in it's oral submission, tried to change it's position saying that the Sale Price was actually $395 and that the Beta sum was extra.
.
The following is the A2 Table submitted by the majority at the STB showing the partial distribution of sale proceeds to those who had made their financial situation known to the the en bloc lawyer. This table is incomplete as there are many unknowns outstanding.
(The Table has been edited to erase unit identification)


A2 cropped,circled,shrunk -
  

4 comments:

  1. Anonymous24 July, 2008

    If verybody is smart then all retract and get equal. Crap dude nothinh is always fair. If it was then we will be in paradise. Takecare my friend and all the best to all.

    ReplyDelete
  2. Anonymous25 July, 2008

    Though one of the majority owners, I must say that the whole beta sum business is very fishy. I for one, am ok one way or the other but must say that I am not impressed with how this whole money business has been handled and agree fully with itsmyhome that if STB had approved the sale, it could potentially set a trend that penalizes those who try to do the right thing (eg-pay bills on time) and allows the bad eggs to get away with things. Kudos to the SC for their hard work but thumbs down for screwing up the money issue.

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  3. Anonymous26 July, 2008

    Whose idea was it to come up with this Beta Sum business? Or is this a typical part of an enbloc sale?

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  4. Re: Whose idea....

    Read the transcripts. It seems the Beta sum was mooted early on in the process by the sale committee but kept from the owners. They rightly deduced that if owners were asked upfront to donate part of their sale proceeds to cover losses above and beyond financial loss then many would not have signed. They would not have reached their 80%.

    It was the brainchild of the financial advisor to the SC, I believe.

    It is most certainly not part of a typical en bloc. This is the first (and last I will wager) that a Beta sum will ever be carved out of a sale price to cover incidentals.

    These Beta problems arose simply because the reserve price and consequently the sale price was too low for many owners to cover basic costs and expenses of the sale and privatisation debts.

    ReplyDelete