how will they do it?, page-7

How will they do it? (the original thread)

Here is just one scenario - don't read into it

Firstly a scenario as to what went wrong re the director's options:

The directors in their mandate to GS would have set up a deadline for  offers of say mid June.
This would ensure a firm offer was on the table, thus enabling the directors to get easier/cheaper finance. (as per flashash's post)
(note this would not necessarily be a final offer with gs still to do some negotiating)
To throw a spanner in the works, along come another 2 more potential suitors who show impressive non binding initial offers.
GS being commission driven would want to extend the deadline to allow these late comers to do their DD.
The directors would be worried about their options - finance etc, so would be hesitant to extend past june 30.
Obviously greed $$ will win.
GS may work out a way around the dilemma, eg performance options or whatever they have in the pipeline.

Now how could this work?

Most performance options, are issued at a vwap (average price) for the week or so leading up to the issue date.
Directors then benefit from any sp appreciation.
In this case, they could use the vwap from say June 30, to when an offer is received to put to SHs. (funny how the current sp seems to be stuck at 23ish cents)
If the offer wasn't made public, they could hardly ask for say 30c options knowing there was a $1 bid on the table...that would be insider trading.
The way I see it, they have 2 alternatives
1 ask for SH approval for more options before a bid is received
(if they were going for this option I think they'd have done it by now)
2 ask for options (or whatever) after an offer is received & make the offer conditional on the directors getting options.

possible scenario: (don't read into prices - just done for the exercise)

xx has offered $A1.00 for Marion's shares
xx has no intention of making a hostile bid and hence relies on the directors recommending the bid.
xx made this bid based on full dilution including the recently expired 40m options
xx recognises the directors extended the original time frames to accommodate our late application and in so doing were unable to exercise their options due to:

1 The privy information they possessed
2 The options being out of the money mainly due to the directors efforts on the sales process as opposed to production objectives.
3 The directors option finance being reliant on offers being submitted by the original June 15 deadline.

and so makes the offer on the proviso yy options be issued to the directors at 23c (being the vwap since June 30)
subject to 90% acceptance

the above is a broad possibility.