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Maso Capital Welcomes Cayman Court Ruling

Maso Capital has welcomed the landmark ruling by the Cayman Islands Court of Appeal in the first case of its kind involving the take-private of a Chinese company. The Court agreed with the determination by the Grand Court of the Cayman Islands that the merger price offered to shareholders in the take-private of Shanda Games Ltd was too low.

The case had been brought by Maso Capital, a Hong Kong-based multi-asset management firm focusing on Event Driven situations, which had been the only shareholder of Shanda Games Ltd to dissent to the price offered in the take-private. The Court of Appeal held that the fair value of the shares managed and advised by Maso Capital were more than 80% above the merger price accepted by its other minority shareholders. The other shareholders had accepted a price of USD 7.10 per share, while Maso Capital received USD 12.84 per share, as per the judgement.

Manoj Jain, co-CIO of Maso Capital commented on the outcome: “We are pleased to achieve this significant victory and substantial uplift for our investors.  We were very satisfied with process involved at both the Grand Court and Appeal Court in what was a complex, multi-jurisdictional valuation exercise.  With regards to all our portfolio investments, we endeavor to maintain an active dialogue with management and always seek fair value for the broader market in addition to our fund investors.”

The original fair value ruling in April 2017 was only the second merger fair value ruling in the Cayman Islands under the appraisal process provided for under Section 238 of the Cayman Islands Company Law and the first to go to appeal.  Section 238 allows shareholders who wish to dissent from the merger to obtain a Court determination as to the company's fair value.  The Grand Court process involved a forensic valuation exercise by two experts, followed by lengthy hearings and cross-examinations, to determine the value of Shanda Games Ltd whose assets and business operations were predominantly based in China at the time of the take-private. The Cayman Islands Court of Appeal decision was released on 6 March 2018.