As a holder of over 1 million TAP shares (and knowing at least...

As a holder of over 1 million TAP shares (and knowing at least one director on the current board and one of those who wants to become a director) I’ve asked myself: are we likely to be better off under the current Board or will the Thai entrepreneur look after our interests better if he gets control?  

I think the answer is very obvious – but here are some thoughts that I feel comfortable saying in public:

1.  The current disruption is about making money.  I bought my TAP shares to make money, too. I understand the appeal to the Thai entrepreneur, who knows TAP is worth much more than its current low share price.

2.  The TAP Board is not responsible for the current low oil price, which has caused much of the share price fall. At some stage the oil price will recover. We’ll all benefit then, not just some shareholders.

3.  TAP’s share price has also fallen because of past Project delays and cost overruns which the Thai Operator failed to control. That wasn’t TAP’s fault; they are a Non-Operator. I worked for other Operators for almost 20 years. You can't blame Non-Operators for the omissions of the Operator; they simply don’t have the say.

4.  Ironically, one person now proposed by the Thai entrepreneur as a replacement TAP director was the President of the Operator of the Project. It lies ill in the mouth of the entrepreneur to complain about project delays and cost overruns when his own nominee held that very influential position. For goodness sake!

5.  Furthermore, the Thai businessman himself has direct equity in the Project, just like TAP, so why couldn’t he control the Operator if it’s felt that TAP should have? He was in a far, far better position to do so given his obvious influence in Thailand (eg. refer the Nido deal) than TAP might have done, by remote control from Australia.

6.  It is unreasonable for a shareholder with just under 20% of the share capital to expect to appoint 80% of the Board (and probably wanting to replace the 5th director when he soon comes up for re-election ie. 100% Board control). That amounts to gaining control of the company and shareholders should be paid a premium for that - but he’s not proposing anything of the sort.  That’s an important insight into possible treatment of the interests of the other 80% of shareholders if he does get control.  His actions speak loudly.

7.  The grossly disproportionate board influence that he wants (80% - and probably 100% -  for just under 20% of the shares) is highly risky for the remaining 80% of TAP’s shareholders, who need independent and balanced Board representation to protect our interests.

8.  The position is even clearer than that, though when, as here, a foreign entrepreneur with a major conflict of interests seeks control.  TAP bought the asset from him, and the amount of the final payments are affected by matters which should be vetted by a financially competent and independent Board, as TAP now has. We shareholders cannot afford to have the wrong levers being pulled at this crucial time.

9.  The current TAP Board has done a good job in selling assets that were at the end of their life cycle, with possibly large liabilities attached to them, and getting in cash; similarly with re-financing Manora.  It's not easy out there.  And, I repeat, they have strong financial and integrity credentials which are essential right now.

10.  This is indeed an opportunistic attempt by an entrepreneur with a major conflict of interests to get control of TAP without paying shareholders a takeover premium. We’d be crazy to agree to that, at any oil price. I think we’ll do far better as the other 80% of shareholders by supporting TAP’s current Board and rejecting its planned takeover. Let’s take the trouble to give that support when it counts: otherwise “Say nothing, do nothing, be nothing”.