OK I wanted to start a thread dedicated to what, as a GDO shareholder, is at the forefront of my mind, and I suspect on the minds of many others -
Who's not going to take the cash offer and gonna keep kicking on with the Chinese... and WHY?
Let me kick off... :
PROS:
--> Super tight registry;
--> Big $$$ behind the "new" GDO, easy funding going forward;
--> access to circle of power in China, ability to get onto the corrupt, greased wheels of the Chinese power structure to the company's advantage (cynical I admit, but realistic - and don't underestimate the advantages this kind of access to power in the 2nd largest economy can potentially bring);
CONS:
--> Dilution now, and potentially MUCH MORE dilution as the Chinese push GDO towards a progressively more aggressive acquisitory stance that may well be funded largely by.. you guessed it - issuing more shares to the consortium! further diluting our holdings while increasing the consortium's proportionate stake;
--> misalignment of consortium's interests and minority shareholders interests: the consortium is to at least some extent a proxy of the Chinese govt. Is their interest in building shareholder wealth or is it in accumulating as much gold as possible in the shortest space of time for long term, strategic reasons? Given the state of the USD they likely suspect we'll be working with gold as monetary standard again not in the too distant future (!!). and I suspect they will be happy to dilute the living hell out of the company, to extend it as far as possible, if need be, to get dibs on more gold, quick. In press releases it has been explicitly mentioned by GDO management that the Chinese want GDO to quicken the pace of acquisitions.
BALANCING UP:
I love a tight share structure (despite diltuon), I love access to easy money and vicariously through the consortium access to the corrupt political structure of the 2nd largest economy in the world, which can really make things happen for the company. But on the flip side I worry whether the strategic goals of the consortium and their political benefactors fundamentally conflict with minority shareholder fundamental interest which lies purely in maximising shareholder returns.
Am I being a little paranoid? If I'm misunderstandin the position post-transaction, IE the ability of consortium to exercise control, please correct me...
Add to My Watchlist
What is My Watchlist?