G'day all. This is my first post and I look forward to a robust discussion. So here goes from a foundation shareholder in OIP.
The pricing of one OIP share as worth only 2.25 GGX shares when on the basis of OIP's superior cash assets one OIP share is worth 16.3 GGX shares suggests that the scheme of arrangement announced last October by which OIP is to merge with GGX is little more than a grab for OIP's $12.77 million in cash.
The merger conditions appear to have been constructed to serve the interests of those OIP shareholders who are also shareholders in GGX, chiefly Dennis Morton. Dennis Morton owns over 30 million GGX shares and is the Chairman of OIP. And there are many other dual shareholders in OIP's top 20 who will also benefit.
Furthermore GGX's tenements valued in the Expert's Report at as much as $11 million would be little more than cash-hungry liabilities on the merged OIP's balance sheet. For if GGX were to go belly-up its three tenements, one each in the Phillipines, France and the remote Canning Basin in tropical Australia, would be next to worthless to an Australian-based buyer. On the other hand the valuation of OIP's tenements here in NSW was discounted because their prospectivity for UCG and shale gas was ignored. How can this be a fair and resonable assessment of the worth of their respective tenements?
The Expert's Report was commissioned by OIP's and GGX's so called "independent directors", the promoters of the merger conditions from day one and whose other directors stand to gain substantially from the merger. Of course that report found the merger to be fair and reasonable for OIP's shareholders. It would appear to be a case of he who pays the piper calls the tune!
If this transaction as it stands is approved at the meeting of OIP shareholders on 27th January then those OIP shareholders who don't own GGX shares will be two time losers, first by the sale of their company's shares to GGX shareholders at too low a price, and secondly by the dilution of their equity by the substantial increase in OIP's share capital. This foundation shareholder in OIP urges all OIP shareholders to vote against the merger.
Readers will be well aware of that addage which says "Cash is King". Hence were OIP's $12.77 million cash asset to be afforded a premium in the expert's valuations enabling one OIP share to be worth say 10 GGX shares, then the merger may be worth reconsideration by OIP shareholders, but it would appear that the 2.25 figure in not negotiable so an OIP shareholder has little choice but to vote against the merger.
OIP Price at posting:
8.0¢ Sentiment: None Disclosure: Held
