Introduction
My name is Troy Harry. I am a professional stockmarket investor managing my own capital and I own 20,754,601 shares in CTP in the following entities which I control:
Rocket Science Pty Ltd 9,554,601
Norfolk Enchants Pty Ltd 4,300,000
JH Nominees Australia Pty Ltd 3,200,000
Kensington Capital Partners Pty Ltd 3,700,000
This makes me the largest shareholder with 4.8% of the voting capital.
I have never posted on Hot Copper before, but felt compelled to in this instance as there appears to be a lot of emotion and misinformation in many of the posts on the HC forum in relation to CTP, and I am concerned that CTP shareholders may be being influenced by this when considering which way to vote in the Scheme meeting.
I originally bought shares in CTP as a squeeze play to force a higher offer out of Macquarie. However, the more I looked at the situation, the more I realised that Macquarie have this company by the short and curlies.
Macquarie
Those of you who believe that Macquarie will be a cooperative and friendly commercial partner if the Scheme fails are living in a fantasy land. Macquarie are ruthless, tricky, avaricious, unscrupulous and powerful. They will make life unbearable for CTP. You may think that the we have a watertight agreement with Macquarie regarding the debt and that we have contractual rights. Well believe me, Macquarie will engineer/invent a breach of that debt facility very quickly and CTP’s only recourse will be through the courts. The debt will be become repayable and CTP will not even be able to raise equity capital for its legal fees to fight Macquarie let alone to repay the debt. No one wants to provide equity capital to a company to pay legal fees or to repay debt. Macquarie will tie us up in litigation and no one wants to subscribe equity to any company with serious litigation overhanging its head. As a joint venture partner, Macquarie will make life very difficult as well, not to mention how they will manage to screw us with the gas marketing agreement. Macquarie do not enter into these agreements without ensuring there is a way for them to screw their counterparty if they want/need to.
Voting
I have spoken to CTP, its lawyers, its financial advisers and read the Scheme meeting documentation and independent expert’s report extensively. I have read all the arguments on this forum, spoken to Stuart Howes from OptionCo, spoken to Robin Judd from the Central Petroleum Shareholders Association and read about New Direction Team.
After objectively considering all available information, I have decided to vote in FAVOUR of the proposed Scheme of Arrangement.
The voting down of the Scheme is NOT a “fait accompli” as suggested on this forum. From my enquiries, I believe that the scheme will be APPROVED. Apart from myself, I believe that the very large shareholders of CTP have, or will be, voting in FAVOUR of the scheme. It is important to understand that the vocal opponents to the Scheme do not actually own that many shares. Even the OptionCo members are not actually that large – the largest of them is the 16th largest shareholder in CTP according to the last members’ register I saw.
If the scheme is voted down, Macquarie will crush us. They will roll us up and smoke us. Then they will buy the assets they want from a receiver. 20c now (and the possibility of something additional in 4 years’ time from the CVNs) is better than zero, and there is a reasonable likelihood of CTP shareholders receiving zero if the Scheme is voted down. This is because of the situation, with $84m of debt and intertwined contractual obligations with Macquarie, the current board has got us into. It is an unfortunate situation, but Macquarie have us over a barrel.
I cannot understand what eventual outcome those voting against the Scheme are hoping for. If the Scheme is voted down, the share price is headed even lower. New equity capital, even if it is available, will have to be raised at say 10c and will cause an explosion in the capital base of CTP. With all the additional paper on issue following the raising of the required equity, it is going to be a long and difficult road back to 20c for the CTP share price. The risks of voting against the Scheme to hopefully achieve a higher price in a few years’ time are simply too high. I have a very high tolerance for risk, but only where the reward justifies the risk. With CTP, the risks in voting down the scheme far outweigh any potential reward/upside.
OptionCo and New Direction
If the scheme is voted down, I will unashamedly act in my own interests to maximise the value of my holding in CTP.
I do not currently have a plan in the event of the Scheme being unsuccessful. If the Scheme is voted down, then I will have to formulate a plan, which will include my own nominees to the board of directors. I am an experienced activist investor and have been through many ASX listed company fights before.
While I do not support or oppose the current Cottee-led board, I can advise that I DEFINITLEY WILL NOT BE SUPPORTING OPTIONCO OR NEW DIRECTION TEAM. I will be voting against any of their candidates at any EGM. Further, if any of OptionCo or New Direction Team’s candidates are appointed to the CTP board through an EGM vote or appointment to a casual vacancy, I intend to immediately requisition a meeting to consider their removal. I will also be requisitioning an EGM to consider a members’ voluntary winding up.
Conclusion
Although CTP does have some attractive assets, the company is now in a bind because of its high levels of debt and its intertwined contractual arrangements with Macquarie Bank. I believe that Macquarie could pull the rug on CTP at any time. They want CTP’s assets and have provided CTP shareholders with a get out of jail free card in an attempt for a clean and timely acquisition. If CTP shareholders do not accept this get out of jail free card, I believe Macquarie will have no mercy on us.
If the Scheme is voted down, we will have the existing CTP board, OptionCo, New Direction Team and myself all fighting for board control. I will also be requisitioning a meeting to consider a members’ voluntary winding up, and if this is unsuccessful I will continue to requisition meetings to compel the board to sell assets.
Unlike some others I am not looking for a job for myself, I am simply exercising sound commercial judgement taking into account the risks and the potential rewards.
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