vote buying: serious issue, page-5

Tana,

One of the key reasons why PGL directors did not choose the CYT option is that CYT directors wanted all the PGL directors to retire following the merger. AVX, by contrast, was prepared to keep JH and two other directors on in the merged entity. By maintaining control of the merged entity for another year or so, the PGL directors can burry potentially damaging information regarding PI88 which might contradict public statements they made about the trial results and capital raising over the last 2 years. I think this explains why current PGL directors are resorting to such dirty tactics (risking contravening the corporations act) to try and get the AVX merger over the line. They are not fighting hard on behalf of PGL shareholders; they are fighting to protect themselves.

There is no question that both CYT and AVX are in a desperate situation. They both need cash in the next few months if they are going to survive. The capital raising options of both companies are limited (difficult for CYT, but impossible for AVX, given the large sum AVX requires). The survival of CYT and AVX depends on the outcome of the PGL vote. This explains why CYT and AVX are fighting hard; but unlike PGL and AVX directors, CYT directors are fighting fair.

By my count, CYT now has the support of all the substantial and sophisticated shareholders on PGL's registry. So the fight is over the passive small shareholders which constitute around 50% of the vote. It seems that vote buying is the only way the AVX-PGL team have chance of getting the votes of that passive 50% (the AVX-PGL team would need close to 100% of the passive vote to get over the line).

If you really are a PGL shareholder (and not an AVX shareholder), you would be foolish to vote for the AVX merger as the AVX option would see the SP plummet immediately because all the substantial holders will be rushing for the exit.

If an ATC deal with big pharma hasn't been signed within 12 months, then the company will likely go into administration with shareholders losing 100%. There are risks associated with both options for PGL shareholders, but only the AVX option carries with it a reasonable probability of 100% downside within 12 months.