Being a voice of reason, I don’t believe the TO Bid is going to be successfully achieved. It’s a big gamble, a roll of the dice to rely upon LNG9 to supply the necessary funds to LNG LTD to see them through the end of the Bid Implementation process with no guarantee they will be able to obtain the minimum 90% acceptance from LNGL shareholders. Should LNG9 fail in their attempt, would they sweeten the deal? How desperate are they to acquire LNG LTD in one of the toughest macro environments ever to face the LNG industry? Especially during a global economic crash... how long until the LNG market rebounds?
Will reveal an interesting tidbit in regards to LNG9’s background and partnerships which gives an insight into their long term strategic ploy! LNG9 is part of a value chain which originates with supplies from Crown LNG and cargoes traded by Katoil. LNG9’s CEO is Swapan Kataria (based in Houston/ Vancouver) who is co-founder and Head of Global Sales for Crown LNG while CTO Gunnar Knutsen, is the CEO for Crown.
Crown LNG is planning to construct and deliver an LNG regasification import terminal in Kakinada, Andhra Pradesh, India, already possessing complete set of necessary licenses and government approvals. If LNG9 is successful in their TO Bid, I’ve come to the conclusion and assume it’s highly likely they will have a SPA contract in the pipeline with an end-user in India.
Can’t blame first Wall Street Capital Corp for pulling the pin on their 6m bridge financing agreement, with the real, high risk of a failed TO bid (not securing the 90% acceptance or LNG9 withdraws their bid. In the event either scenario eventuates, we are penniless from a cash standpoint then the Company enters insolvency;
” If the Offer conditions are satisfied or waived, shareholders who accept the Offer avoid the risk of LNGL entering administration or liquidation, which event would introduce risk of significant value loss resulting from, among other things, insolvency clauses existing in key Magnolia LNG contracts, such as the EPC contract, equity commitment agreement, and the site port lease, which clauses provide counterparties with rights including contract termination.”
Our only asset is the Bear Head site. Why has our secondary project that is receiving no attention and made very little progress over the years, been overlooked as a sale proposition?? We acquired the land for USD $11m on 27 Aug 2014 (equivalent to AUD $18m today), a reasonable possibility the site would of gone up in value since then while the proceeds from the sale would keep us fuelled for a minimum 3 quarters?! In turn we immediately go to work on sourcing additional capital while finalising our first ever SPA contract with DeltaOE!
If joint Company statements are to be believed, this SPA seems destined to be banked as evidenced by this LNG LTD media release on 27 Dec 2019 headed “LNGL Comments on Vietnam Power Development Plan 7 Approval”. “As we have previously disclosed, the approval of the amendments to Vietnam’s Power Development Plan 7 was the prerequisite for execution of our binding sales and purchase agreement with our partners, Delta Offshore Energy, for 2MTPA from Magnolia, “said Greg Vesey, Executive Chairman, Managing Director, and CEO of LNG Limited. “We thank Prime Minister Phuc and members of his Cabinet for their supportive efforts, and will immediately begin completely the terms of what will be the first long-term sale and purchase agreement for LNG to Vietnam”.
On 11 Oct 2019 both parties agreed to extend the validity date of their agreed upon non binding Term Sheet until 1 July 2020 by entering into an amended and restated MOU. Both parties also agreed to use reasonable efforts to negotiate a definitive SPA by 31 May 2020.
Shareholders have a number of statutory protections and rights available to them, regardless of the quantity of shares they hold. These include:
- The ability to bring legal proceedings in the company's name, including against the directors of the company, with the permission of the court.
- The ability to inspect the company's books, with the permission of the court.
- The ability to apply to the court for orders in cases where the company has been run in a manner that is unfairly prejudicial to a member, or contrary to the interest of the members as a whole.
- The ability to call a meeting of the company and propose resolutions.
Can a general meeting be held by telecommunication means or written/electronic approval? A company can hold a general meeting in two or more locations using any form of technology that gives the members as a whole a reasonable opportunity to participate in the meeting. Proprietary companies can pass resolutions (without holding a general meeting) by way of a document circulated among, and signed by, the company’s membership. The resolution is passed when the last member signs. Public companies cannot pass resolutions by circulating written resolutions.
Section 249D of the Corporations Act 2001 now provides that the directors of a company must call and arrange to hold a general meeting on the request of members with at least 5% of the votes that may be cast at the general meeting. The percentage of votes that members have is to be worked out as at the midnight before the request is given to the company and this determination is ordinarily made by examining the company’s register of members.
For a requisition of a general meeting to be valid it must; be in writing; state any resolution to be proposed at the meeting; be signed by the members making the request; and be given to the company.
The directors must call the meeting within 21 days after the request is given to the company and the meeting is to be held not later than 2 months after the request is given to the company.
Although 100 members of a company are no longer able to require a general meeting to be called and held, 100 members of a company are still able to; propose resolutions for inclusion on the agenda of general meetings that have already been called through proper means; and require the distribution of statements, at the company’s expense, in relation to a proposed resolution or a matter that may be properly considered at a general meeting.
Shareholder groups can be highly influential in monitoring a company's actions. The shareholders' ability to call meetings of the company and propose resolutions means that dissatisfied shareholders have a powerful tool at their disposal for keeping directors accountable.
Shareholders who amass enough support to call a members' meeting and propose a resolution may be able to remove individual directors, "spill" the board or pass other resolutions that affect the operation of the company.
This is very important for all shareholders to realise because we’re not exercising the underlying power we possess if we’re prepared to wait and see how the TO Bid plays out! If indeed it fails, the board will continue to keep absolute control, dictating terms in determining our end without shareholders ever having voiced their say on a potential resolution. The options are limited but we have a voice, it’s not to late to use it!
For those Shareholders that are willing to hang strong till death do us part (facing insolvency), we must come together and unite as one! This can only happen if we’re on the same page, share the same beliefs on the best course of action to survive, to greatly improve share valuation from the promising finalisation of the SPA with DeltaOE then you never know..... possibly this may breathe life into the Company sparking sudden renewed interest from Institutional investors now wishing to inject more capital while also enticing a buyer or 2 to jump off the fence and secure offtake!
Just securing DeltaOE’s signature would certainly see the SP eclipse the bid price LNG9 are offering then who knows where our valuation could bolt to... at least we’re attempting to maximise SP potential on a weak ASX instead of waving the white flag right now, calling an end to an epic journey long term holders have endured since the story was hatched in 2004.
With GV/ Board having a poor track record of delivering on projections, timelines and promising future outlooks, I have no faith this TO Bid will be successful! We must be prepared for this to fail because... “Based on discussions held to date, LNGL anticipates that new sources of funding on terms acceptable to LNGL and LNG9 will be obtained, although that is not certain”. The latter 5 words raise alarm bells, words at this stage of the game I finally believe to be a true indication and sign how this is going to go down! There’s to many factors working against LNG LTD to pull this off.
It’s my recommendation we hold a conference call or open a Whatsapp group chat... share ideas, brainstorm and come up with a resolution we can legally pass onto our Company directors. For those in favour, please show your approval with recognition via a thumbs up + light bulb and hopefully I gather enough support to warrant taking steps to try make a positive difference in where the SP eventually ends up. Ideally, my goal is to round up 30-50 shareholders, even combined with past holders who sold out. MoneyBags, I never received your email.
Stay safe! All the best...
JK.
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