doing something, page-8

Knocked this up last night out of a few info sources, feel free to correct any mistakes and add relevant information before using how you see fit.

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I don't know if you're aware of the story of the Brockman Resources takeover by Hong Kong company, Wah Nam International?

Given the failure of almost everyone who should be looking out for Australian shareholders, I'd hope you'd take an interest.

Wah Nam is a Hong Kong company that has dabbled in plastics and electrical manufacturing and was a toll road operator in China. It is now a part mining company/part airport taxi service. Wah Nam also owns a copper mine in China, but apparently haven’t been able to operate it on occasion because the government re-directs their electricity.

Wah Nam hasn’t turned a profit since 2006, but they are successful at one thing – raising capital. It has repeatedly issued shares and convertible notes.

Wah Nam bought a stake in Brockman after being compensated by Hangzhou City in China, for the end of their toll road business. They then raised cash several times to fund further increases in their Brockman holding, again issuing more and more shares.

Wah Nam launched a takeover for Brockman in November 2010 holding 22.63% of the company. Calculations at this time revealed Brockman’s then $4 shareprice was 80% undervalued against the potential of its flagship Marillana iron ore project.

Wah Nam didn’t offer cash to buy Brockman, it offered to compensate Brockman shareholders by issuing more of their own shares (a familiar theme), equivalent to $6.47 a Brockman share.

Brockman’s board, including current directors, Colin Paterson and Ross Norgard, recommended shareholders reject the offer suggesting the offer significantly undervalued the company, noting concerns with the underlying value and liquidity of Wah Nam’s shares.

January 2011 Brockman’s board made a submission to the Takeover’s Panel alleging Wah Nam and its associates had been warehousing shares to accept the takeover.

An investigation revealed 17.25% of Brockman being held by a group offshore that had connections to Wah Nam. While the Takeover Panel found no acceptable circumstances they noted the following:

“There may be new circumstances if some or all of the shareholders identified in the application accept Wah Nam's bid such that it enables further inferences to be drawn and they support an association.”

A whole scheme appeared in place to warehouse and transfer shares into the bid and that line from the Takeovers Panel seemingly rendered the scheme useless.

Wah Nam, month on month, continued to extend their takeover bid without any shareholder acceptances being received.

At the same time there was virtually no trade in Brockman’s shares. Between December 2010 and early March 2011 trade volume only once surpassed 500,000 shares, on a significant number of days trade volume failed to reach six figures.

March 4, 2011, a large trading spike happened, with 7.58 million shares being traded in a short period of time. The next day after this period ended only 9063 shares changed hands.

April 1, 2011, another large trading spike occurred. Over nine days, 16.62 million shares were traded, the day after this spike ended only 39,634 shares traded.

The combined total of shares traded during these unusually high volume periods? 24.2 million shares.

The combined total Wah Nam’s offshore associates held? 25.4 million shares.

Soon after the last trading spike, acceptances of Wah Nam’s takeover began. Wah Nam eventually got control of 55% of Brockman, virtually all those acceptances from offshore with a tiny 0.12% of Australian acceptances.

Since Wah Nam gained control of Brockman in June 2011:

All shareholder information, including broker reports showing company valuations have been removed from Brockman’s website.

Brockman has gone virtually silent on any progress or strategy going forward.

Brockman’s new chairman, Wah Nam’s Peter Luk has been found to be under investigation by Hong Kong’s Independent Commission Against Corruption.

Brockman’s shareprice has fallen over 60%, with suspicions it was being pushed downward for another takeover attempt, this time at a lower amount.

To every observer it appeared Brockman’s progress was being slowed to further frustrate shareholders and have them quickly accept any new takeover attempt.

Earlier this week Wah Nam launched another takeover, a combination of cash and scrip valued at $3.03.

Immediately, Brockman’s independent directors, Ross Norgard and Colin Paterson, (who previously recommended rejecting the higher valued offer) recommended shareholders accept.

A significantly lower figure than a recent independent report, which valued the Marillana project alone at between $4.47 – $6.87 a share. These estimates ignore nearly $40 million of cash in the bank, Brockman’s significantly important port allocation and another 39 mining tenements.

Yesterday, former Brockman chairman, Barry Cusack, said the following of Norgard and Paterson, “I don't think they are independent so I don't know who is protecting the minorities."

He also said the following of the regulatory bodies, “"There were three agencies involved: FIRB, the Takeovers Panel and ASIC. None to my knowledge has chosen to take any investigative action and here is a company with a lot of Australian shareholders."

Apparently, Norgard and Paterson are being rewarded with free option conversion as a sweetener, while shareholders are being expected to effectively realise $1.50 in compensation because Wah Nam’s shares on the ASX are illiquid and will be impossible to sell given Wah Nam’s notoriety.

The other option of accepting Wah Nam shares listed on the Hong Kong exchange would prove a complete hindrance to most Australian shareholders.

It’s an emotive thing to say, but Australian shareholders are being robbed and they’ve had no protection throughout this whole ordeal. The regulatory bodies have done nothing and now their directors have now abandoned them.

How could a Hong Kong limo company and its associates be allowed to acquire 55% of an Australian company without Australian regulators taking any interest?