Suspend Trade of Rap Shares, page-5

Make no mistake, I hated the original deed of scheme implementation and the amended deed is worse... slightly. But I think that getting trading suspended is variously unlikely and unwise:

1. It's unlikely that you would get ASIC to agree to halt on the basis that a scheme of arrangement is not an appropriate instrument. While it's true that schemes of arrangement were originally designed for a different situation, they have become established as a regular pathway for friendly takeovers. They offer more flexibility and fewer regulatory controls than the alternatives of on-market or off-market bids.
2. It's also unlikely that you would get the ASX to intervene on the basis that the news flow has stopped. You would have to provide specific information that the company knew but failed to disclose. That kind of situation generally only arises after the fact: the company makes an announcement which implies that the information was delayed, the ASX asks questions that the company can't answer satisfactorily, and the ASX may require a trading halt until the matter is resolved. While the offer's premium to the prevailing share price is eroded by the fact that Pfizer's contribution to the Covid19 test development, that knowledge is now public and investors are able to take account of it.
3. Finally I think it would be counter-productive to have trading halted right now. As of Friday 70 million shares have changed hands at between 12c and 13c. If trading is halted then those holders are locked in and can only escape at a profit if the takeover succeeds. Another 13 million shares changed hands between 16c and 17c. Some may have bailed at a loss after the suspension but any holding out for a better exit would also be trapped and would have to pin their hopes on a successful takeover.

I think it is everybody's interests to let the market trade. Hopefully the those who are selling now to take profits or minimise loses will be progressively consumed by those who see value in the company at 14c or more.

I believe the board is now out of ways to potentially lift Pfizer's offer price. The independent expert's report was a prime opportunity, but clearly Pfizer were only prepared to lift their bid to the very bottom of the range. The board used the data confirmation report as a way to lift the bid, but that report failed to hit the mark.

The only other possible avenue for the board to have Pfizer increase their bid is if there is good news of sufficient magnitude to make the independent expert revise their fair value range upward. The quarterly report could do it, and that must be released by the end of July, which would be before the shareholders vote on the takeover, so that's a possibility. An alternative bid might arise, but that's in the lap of the Gods, and the board has no influence over whether it happens.

But think about what if any of those things happen: another revised scheme of deed implementation, another scheme booklet, and the countdown to the vote goes back to 6-8 weeks once again. We've already been tangled in the brambles of Pfizer's offer for over two months with six weeks to go before we can vote.

How many more months will the board allow the company to be kept in suspended animation like it now is?
How many months of delay in commercialising ResappDx has this process cost the company they are supposed to be running on our behalf?
How many hundreds of thousands in costs and lost income has the process cost the company?

The board and the management would do well to remember that if the takeover fails as many of us intend that it should, they will have to face the shareholders and explain their decisions.

If I were on the board and an opportunity arose to withdraw support from the scheme of arrangement, such as an upward revision to the independent expert's fair value, I would grab that opportunity with both hands and put a speedy end to the damage this is doing to our business.