BRB (ASX) Ann: Notice received s203D(2) and s249F of the Corporations Act

Originally posted by mulac1: ↑

Hi jdpc35, in a post on another BRB thread, you said:

"This is not a normal takeover in that the major asset here is the $80m cash. As we well know (courtesy of the Bond Corp / Bell saga), RMS can only touch that cash if it gets to 100% of BRB. Anything short of that and they control BRB but are stymied on doing what they are really wanting which is to have access to the resource and an easy top up of cash reserves."ATM, I am waiting to see how the cookie is crumbling in this saga. However, it was with interest that I read your above post.

In the Bond Corp/Bell case, the issue seemed to be whether the board (with less than 90% uptake) could appropriate the target's money towards activities external to the business of the target's activities. Essentially, the minority interests were protected against misappropriation of funds from non core activities of the target.

In our case, if RMS fails to acquire 90% of BRB, RMS would not be able to appropriate our cash to it's other activities. However, on my understanding, RMS as the controlling shareholder would be legally able to appropriate our cash towards the core business of commercializing Lake Roe as it is core business of BRB and would thus be meeting minority interests.

That's my take on how this is likely to play out if RMS does not secure a 90% uptake.

Your thoughts?

Cheers
Mulac1

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You are 100% correct with your analysis Mulac1.

If they fail to get to 90% and compulsory acquisition:

1. The cash must stay in BRB and used only to the benefit of BRB shareholders (so one avenue would be developing the open cut);
2. If they went ahead with Rebecca, they could look at a toll treatment agreement with BRB, but this would have to be on demonstrably commercial terms;
3. The remaining BRB shareholders would then get the benefit of the development of BRB's resource.

As I have stated before, I think the cash is as important to RMS as the BRB ore, and that is because they have offered a transaction that preserves the cash (1 RMS for every 2.83 BRB). If the cash was not important, the deal would have been something like 1 RMS for every 5.5 BRB plus $0.20 cash.

This has some way yet to play out in my opinion.