“The Board notes that the trading price of [BDT’s] shares has consistently reflected a valuation significantly below both the Board’s view of [BDT’s] intrinsic value and the valuations of comparable unlisted companies at a similar stage”Will the Board tell us what its view actually is, of value per BDT share?
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The cash balance at 31.12 24 was 5.8 cents per share and the NTA was 11.6c. Thus the buyback price is less than cash backing and less than half NTA. The buyback will be funded from BDT’s own cash: the two major shareholders will not need to provide any capital, and they will get all or most of the expected eventual increase in value.
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Although this proposal purports to be an “equal access share buy-back” it is not in effect, because two parties with 39.5% will not participate. Their effective shareholding and voting power will increase for every share that is sold into the buyback.This is really a selective buyback, by default. In effect it is commercially equivalent to a takeover, without conditions (other than the delisting).
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Miall and Calnon i.e. the CEO and CFO are the two men who should be the most knowledgeable about BDT’s prospects and intrinsic value. “The Board remains confident that, over time, the Company’s valuation will move closer to its fair value as assessed for an unlisted entity”.
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This proposal may not technically be a takeover or selective capital reduction in terms of the Corporations Act, but it is very similar in effect. The CEO and CFO have a major conflict of interest, especially Mr Miall. The Board (and Mr Myall should recuse himself) should insist that the notice calling the EGM is accompanied by an independent expert’s report as would have been required under a takeover, since “bidder’s voting power in the target is [either] at least 30% of the target or when the bidder and the target have common directors: Corps Act s640” per ASIC Regulatory Guide RG111“. Also ASIC says “An expert report should usually accompany the explanatory memorandum to satisfy the information requirements of fairness under Corps Act s256C (4) (Selective capital reductions)”
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If the Board does not commission such an independent expert report, there are strong grounds for asking the Takeovers Panel to declare “unacceptable circumstances”, especially as prima facie the price offered is extremely cheap- and indeed that is admitted by the Board’s own comments about value. This is a de facto takeover, but instead of a premium for control being offered it is a discount for control! Although the high cost of BDT being listed is a valid concern, this deal is otherwise very dubious and opportunistic. It is embarrassing that those standing to benefit most are those with a leading role in the direction and management that have led to the loss of investor confidence and catastrophic share piece decline, that they themselves have the gall to complain about.
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The only way that the Board can dispel these unsavoury impressions it is to provide minority shareholders with an independent expert’s report on its fairness or otherwise.
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It is true that shareholders do not have to sell any shares into the buyback, but they have the threat of imminent delisting of any shares that they retain.I assume that the two major shareholders will be allowed to vote on the resolution, despite their conflict of interest.For many shareholders delisting would be a major disadvantage, and an impetus to sell, albeit reluctantly.
Not advice.DYOR.
(20min delay)