Time to Fix EGO, page-8

Singa. You have put some ideas into this discussion that bear further thought particularly the first on removing the board.
The question is, how can this be done as they will not go without quietly. What I mean here is "give me the money and I will leave".
In truth to "roll" the board ERM have to be convinced they are on a losing streak in their investment.
However that said ERM does hold the levers of power of EGO.

- if EGO defaults on its repayment of its debt to ERM they will not I believe be party to a renegotation of the debt. They will enforce the provisions under which the loan to EGO was established or it will force EGO to sell the RG plant to repay the loan if EGO have been unsuccessful in getting debt finance or any other finance.
If ERM takes a pre-emptive stance and enforces the loan provisions it will sell EGO piecemeal to recover its debt and to recover as much of the value of its 19.4% investment in EGO as it can.

- another way out is for another "white knight" to come in and offer to buy out ERM's investment for an agreed to price, something better than what it is worth at the moment and going forward. Additionally the "white knight" will also repay EGO's debt.
The second part of this negotiated "give me the money" deal is acquire all the interests of the second largest investor who has a 6.6% holding.
Each of the large investors will get most of their investment back and EGO will be taken and the major players will exit the company and importantly so will EGO's board.

This is a link to the takeover rules.
http://www.takeovers.gov.au/content...mmary_of_takeover_provisions_in_australia.htm

Another question is why should a "white knight" bother with EGO spending a very large amount of money to gain what?
a small gas plant worth say $20,000,000.
relatively small gas and condensate reserves
a 10Pj contract with Alcoa and sales contract with BP for its condensate
revenue of approximately $20,000,000 p/a,
this perhaps though what may attract a "white knight" a permit holding of most of the Perth Basin and a diamond in the rough at Lockyer/Erregulla adjacent to AWE's permits and its large gas discovery in the Kingia/Highcliff sandstones in the Waitsia well.

Will the "white knight" have a plan other than replace a "lifestyle" board with another at EGO. Imho, I believe it will have to, to recoup its investments.
Firstly to drill and quickly monetise any hydrocarbon discovery made to take advantage of the expiring Domgas gas supply contracts. AWE has already done this with Alinta. Santos and Alcoa have done this with gas sourced from offshore in the Carnarvon Basin.

The anticipated result of the board's consolidation to reduce share trading liquidity has occurred but has resulted in stagnation.
To reverse the consolidation may be difficult and may not be required if the "white knights" board of directors have the right credentials, people the market knows, to proceed to drill, discover and monetise their discoveries.
Just the fact of advising the market EGO is flush with new money, no debt and a new board of directors who know the O&G business will invigorate trading.

Imho, EGO in its present state is debt ridden, with a fistfull of promises with no forseeable way of actually carrying out those promises.

Perhaps you are correct in what you allude but where is this "white knight?" We definately do need our present board to step up and tell the market how the company is going to carry out what has been announced. Four 2016 pie in the sky drilling options which are dependent upon finance is just not good enough. Why say it, it is impossible with 10 months to the year to go.


DYOR