takeover bid -by shareholders!, page-10

Great posts regarding this issue -thanks all.

Without a solid alternative proposal, voting “no” to the 1,350 Mil institutional placement would:

1. Not succeed due to voter apathy and/or fear.
2. Be very detrimental to the stability of Asciano.
3. Be like cutting off our nose to spite our face.

A vendetta against Mark Rowsthorn will not put one red cent into my bank account. This is business, that is how management see it (and why to us mortals their decisions can appear to be ruthless), and exactly how we should see it as shareholders.

I have nothing against Rowsthorn being in charge, he has personally lost more than any other human owning AIO shares, and he is prepared to back up his belief with another few hundred million. I want the person in charge of my company to own 10% of it.

What I object to is a transfer of wealth to the institutions, without any other shareholders having the same terms as the institutions –or at least some compensation for their loss.

It is against the basic ideal of fairness that is such an important part of being Australian.

Just watched his interview and although (from general consensus) I was a little surprised not to see any horns protruding from his forehead, he didn’t adequately address the issue of shareholder dilution without compensation and seemed a little unsure on this issue and on the issue of his special deal. Kohler was way too soft and needed more research. More of a “hardtalk” interview would have been appropriate.

Back to business.

Why are shareholders in a much better position to negotiate now than before the offering? Simple maths:

“A total of $1,922 million has been committed by institutional investors, comprising the following fully
underwritten components:
• $341 million from the institutional component of the entitlement offer (“Institutional Entitlement
Offer”)
• $231 million from the unconditional placement (“Unconditional Placement”)
• $1,350 million from the conditional placement (“Conditional Placement”)
In addition, the retail component of the Entitlement Offer of approximately $428 million (“Retail
Entitlement Offer”) is fully underwritten.”

The total offer is 2,350 mil, and of that 1,000 mil is already underwritten and certain. The underwriters could not get out of this even if they wanted to.

In addition, the remaining 1,350 mil is also underwritten – and is certain providing shareholders approve. This gives shareholders a very good bargaining position to offer (or suggest) a viable alternative.

A few times, I noticed that M.R. discussed the conditional placements as though they were certain, and they will be -if traditional shareholder apathy prevails.

What can we do?

We get institutional investors currently not included in the special deal, to propose a more equitable renounceable offering, and we canvass broad shareholder support for it.

In light of the underwritings and positive share price response, a competing offer may even have more favourable terms for the company.

With some support from shareholders, an institution may be encouraged to approach the board directly with a competing offer –which they would be compelled to announce under continuous disclosure rules.

Perhaps shareholders could approach New Zealand’s Graham Hart for support.

This is where we need action from those with more experience.

I’m going to start the process with another thread with a call to vote for support.

Let’s be positive and proactive.

John S.