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Merger: Yes or No, page-908

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akgo01

5,195 Posts.

767

17/12/23

12:40

Post #: 71492371
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Originally posted by akgo01: ↑

Some days ago I asked @TeBee and @tt2000 the following questions:

"To convert CDIs to NewCo shares for Australian residents, please tell me the following:
1/ which broker to use?
2/ what documents are needed? and
3/ how much does one have to deposit (in US$ I would imagine) to open an account with this broker?"

Until now we still don't know with certainty if we can ever convert CDIs into NewCo shares and vice versa easily whenever we want or/and have to for any reasons.

If it turns out we can do it easily then the risk which I want to highlight below for the last time is invalidated. But if it turns out to be difficult or even not possible, then this risk is very real especially to those who buy and hold and plan to hold AKE or NewCo for a long term.

The Scheme Booklet in page 49 spells out the principal differences between holding NewCo CDIs and NewCo Shares as follows (my emphasis and my comments in brackets):

"• holders of NewCo CDIs do not have legal title in the underlying NewCo Shares to which the CDIs relate;
(we hold the CDI, but have no legal right to the shares!! I don't know the implication of that, so I want to avoid it if possible.)

• holders of NewCo CDIs are not able to vote directly as shareholders at a meeting of NewCo. Instead, holders of CDIs are provided with a voting instruction form which will enable them to instruct the Depositary Nominee in relation to the exercise of voting rights. In addition, a holder of CDIs is able to request the Depositary Nominee to appoint the CDI holder or a third party nominated by the CDI holder as its proxy so that the proxy so appointed may exercise the votes attaching to the NewCo Shares; and
(How can I know the Depositary Nominee, the registered holder of the shares, votes following my instruction? And how easy is it to get an appointed proxy to exercise the votes attaching to the NewCo Shares? No idea. So I want to avoid this CDI business if possible.)

• holders of CDIs will not be directly entitled to certain other rights conferred on holders of NewCo Shares, including the right to apply to a Bailiwick of Jersey court for an order on the grounds that the affairs of NewCo are being conducted in a manner which is unfairly prejudicial to the interests of NewCo Shareholders; and the right to apply to the Jersey Financial Services Commission (JFSC) to have an inspector appointed to investigate the affairs of NewCo.
(What??? Let me repeat it: "holders of CDIs will not be directly entitled to certain other rights conferred on holders of NewCo Shares". What certain other rights we, CD holders, won't be entitled?

If the NewCo raises capital by share purchase plan (usually at a discount to eligible shareholders) and we can't participate, then the value of our CDIs is diluted immediately. The same case if NewCo has Divedend Reinvestment Plan and allows only the shareholders to participate. Am I right?

If the NewCo merges with another company, what can we do with our CDIs if we cannot convert them into shares in time? We have to sell them.)

This situation is uncertain. Therefore the risk may be real. We don't know. What we know is voting FOR the merger is accepting to take that risk should it turns out to be real.

Vote wisely.

Expand

On 13 December I wrote:

"• holders of CDIs will not be directly entitled to certain other rights conferred on holders of NewCo Shares, including the right to apply to a Bailiwick of Jersey court for an order on the grounds that the affairs of NewCo are being conducted in a manner which is unfairly prejudicial to the interests of NewCo Shareholders; and the right to apply to the Jersey Financial Services Commission (JFSC) to have an inspector appointed to investigate the affairs of NewCo.

(What??? Let me repeat it: "holders of CDIs will not be directly entitled to certain other rights conferred on holders of NewCo Shares". What certain other rights we, CD holders, won't be entitled?"

Then I speculated that holders of CDIs might not be able to participate in share purchase plan and Divedend Reinvestment Plan.

I have found out that that specualtion is wrong. CDI holders can participate in SPP and DRP, according ASX Listing Rules Guidance Note 5 CDI (amended 01/12/19). The CDIs will also have to bought just as the shares if the company is takenover.

What is not mentioned in the Guidance Note 5 CDI is what happens when the company merges with another company. This is still not clear.

And what exactly certain other rights CDI holders won't be entitled is also not clear.

AKE Price at posting: $10.47 Sentiment: None Disclosure: Held
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