Jaya

Jaya: ($0.191) Getting a last puff from a classic Buffett “cigarette butt” Jaya’s current price of $0.191 only takes into account the upcoming $0.16/share cash distribution and residual book value of $0.032. However, it has not priced in the additional intrinsic value that Jaya now has as a listed shell company (estimated $15m-30m). Should Jaya be acquired in a reverse takeover transaction, the stock could be worth an additional 2¢ to 4¢, thereby offering potential upside of 60% - 125%, based on a theoretical ex-entitlement share price of 3.1¢. Jaya will go ex-entitlement on 2 Jul, with regard to the $0.16/share cash distribution via a capital reduction. Recall, earlier this month, Jaya had distributed $0.625/share by way of a special dividend, in accordance with its promise to return the bulk of cash back to shareholders following the disposal of its entire core offshore support and engineering services business. After payments of the cash distribution and dividend, as well as directors’ fees, Jaya will be left with a residual cash balance of ~$32m, of which: - $7m has been budgeted for future operating costs and an incentive bonus payable, and - $25m earmarked for warranty claims associated with the above business disposal. Assuming no warranty claims are made, this $25m (3.2¢ per share) may be distributed in due course. As the company has ceased to have any operating business and its assets consist substantially of cash, Jaya has 12 months (plus another 6 month extension) to find a new business or face delisting, under SGX rules. Investors should therefore note the potential liquidity risks in this stock.