Goodaye, yes this deal is complicated, and there are many issues...

Goodaye,
yes this deal is complicated, and there are many issues for coy, Board and s/h to get their heads around.

I think s/h can contemplate some of the issues re ERM position.
agreed ERM has stated that ERM are interested in their core business- power generation & distribution.
I think they took their O&G positions in order to secure their supply.
How good did that turn out!? Investment in NSW CSG ! and investment in EGO! Some other stuff in WA.

So this deal with EGO is not only a play to rescue their EGO investment (and get some value out of EGO), but ALSO to resolve the ownership of ERM Gas division assets. It is effectively a backdoor listing of those assets. It will swap those assets for equity and loans into EGO. The equity it gets in EGO is liquid- it can sell that equity, distribute said equity in-specie to its ERM s/h, or it can hold the equity.

Selling their gas assets to EGO is sensible for ERM, because its a pathway out of the O&G business, it still protects its source of supply (by receiving 19.9% of EGO), its semi-liquefies those assets (which it didn't really have much control over anyway), BUT also provides the J/V with a much better opportunity to sell-down to a bigger experienced O&G coy.

the real problem with a CR is the willingness of s/h to take-up the CR.
Given ERM and associated parties have at least 11%, the willingness of ERM to commit further funds to EGO without ending up with a 19.9% stake would be problematic.
ERM may well have said "19.9% or nothing" ?? don't know.
Because ERM might be thinking, why take the risk and sell our O&G assets, invest high risk equity into EGO, only to watch a predator take out EGO for a bargain when EGO proves-up RG etc? Hold 19.9% and no-one can t/o EGO without talking to ERM first.

So any CR is pretty much predicated on what ERM agrees to support.
those next biggest s/h would be nervous to take-upp a CR if they saw ERM not support it.

At 10% ERM could reasonably demand 1 board seat.
At 19.9% they could demand 2 board seats.
Have a look at CUE Energy (CUE) last couple of ASX releases.
some good discussion re a s/h with less than 10% wanting 2 board seats.

WCL had NHC as 17.67% s/h. It had a EIT Funds Mgt with about 11%.
They called NHC the "Kingmaker".
Chinese got to 31%, and then NHC folded for a crap price(I think because it decided to get out of O&G !).
So the board capitulated, and s/h got the crappy price as well.

So EGO s/h really need more info to judge this proposal - we need to wait until the IER is released.

If the IER does not answer our questions, we need to request the board to summarise what the alternatives were, and what the issues were/are, and explain just why this ERM proposal is superior to others.

Again, the bottom line is EGO must get funding from somewhere.