Ann: Letter to Shareholders , page-6

boxhillnorth wrote: "The $1.32 CKI cash is much more attractive to the bulk of investors"

This statement is almost certainly false. First, the cap gains effect alone undermines CKI's offer because most ENV cap gains roll over to APA shares in the APA offer whereas the CKI offer triggers cap gains. Whether you bought ENV shares two weeks ago or a decade ago, CKI's bid needs to be discounted by the tax effect.

Second, ignoring cap gains effect, the APA bid is probably superior to CKI's in its current form for most ENV holders because APA's sp would likely be at or above its current sp if CKI had approved the APA deal. Here's why. ENV shares closed as high as $1.275 in late February, then dropped as soon as CKI's opposition became clear. Yes, the APA bid is variable, but I suspect that APA's sp would be around the current price or a bit higher if CKI did not intervene. That works out to $1.32 or higher.

Third, most superannuation funds (and probably many SMSFs) are starved for long-term stable infrastructure investments. I suspect most ENV shares held in nominee accounts are super fund holdings. The CKI buyout removes yet another infrastructure asset from Australian investors.

Fourth, ENV holders get the full APA distribution (ex-div in June). Although the sp falls ex-div, ENV holders get the benefit of the asset appreciation leading up to that date along with the ENV distribution last month.

FYI: I own both APA and ENV shares in roughly 3:2 ratio.