Ann: Notice of Extraordinary General Meeting/Proxy Form, page-2

BDT EGM 20 May 2025

This is not “advice” on what shareholders should do, but hereare my further thoughts on the EGM proposal, and what I intend to do for my ownshares. Please see also my post on HC 09/04/25 Post #: 78616371which covers some of the points made at https://hotcopper.com.au/threads/delisting-help-and-advice-needed.8543188/

Just before the Easter long weekend BDT released its formalnotice of the EGM (NOM) (to be held on Tuesday 20 May) and Explanatory Memorandum(EM). Shareholders will not get a papercopy of this unless they have asked for it. The latest documents add littleto the earlier announcement.

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I have seen many NOMs and EMsin my 50 years of investing, but these are among the weakest for governance anddisclosure. The EM says much about the legaland prosaic aspects of the resolutions, but little on their bad value for minorityholders. The Board is almost implying that BDT is a victim- that BDT suffers thehigh cost of listing (relative to its tiny market cap) because of an unsympathetic“market” and uninterested shareholders; in truth the Board and management have overseenterrible value destruction at BDT. The minority holders are the victims and arenot guilty! They might be willing to sell now to stop the BDT misery, but notat 5c.

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The proposal appears cleverly designed to be able to achievethe effect of a major shift ofownership and control of BDT at well below fair value and without having to make a formal takeover bid. A further crucial difference is that in a takeoverthe proponents would have to finance the bid consideration themselves, and pay theirown professional costs; here all of the funding (and I assume the legal costs) willcome from BDT’s own cash. My two majorobjections are (1) there is no independent expert report on valuation anddiscussing the commercial pros and cons of the proposal as it affects minority shareholders;and (2) the ASX has not imposed a voting exclusion on the proponents (and BDThas not volunteered one)- in particular on Miall and Calnon, nor on the Chair(Dixon)- who will not participate in the buyback and are thus likely to end upwith much larger % ownership of BDT.

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It is absurd and outrageous that theEM says “The Board is not aware of any other information that is relevant to the consideration by members of theproposed resolutions set out in this Notice of Meeting” and that it recommendsmembers seek (and pay for!) their own independent advice –if they want it- onthe transaction (and see later).

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The delisting resolution requires 75%+ of votes cast but these 3 people have 40% betweenthem which gives them a very strong head start. Voting at small cos is generally apathetic even when minority investorswill be adversely affected. The top 20 shareholders at 19 /8/24 owned 83% ofBDT; below that the shares are widely dispersed. I hope that all the top 20 vote, so at least thevote will be representative of what most investors think. If no one else supported the delisting resolution,and 15%+ voted against, it would be defeated. The voting intentions of other investorsare unknown (except for those of the proponents) so it is crucial that any objectorsmake the effort to vote.

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NB the resolution for delisting requires 75% of votescast (not total shares) to be in favour, for it to take effect. However, the resolution to approve the buybackis an ordinary resolution which requires only a 50.01% majority of votes cast(not total shares) to pass. Since the proponentshave been allowed by ASX (shame!) to vote their 40% holdings the buyback will proceed*unless over 40% (out of the remaining 60%) vote against. That means at least80% of all BDT shares must be voted to have any chance of blocking the buyback. Given typical voting behaviour at suchmeetings that’s a very tall order. Therefore, I expect that that the buyback resolutionwill pass even though it will – in my opinion- be at an unattractive price.

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* (assuming that Resolution1 passed ) The NOM says “If Resolution 1 is not passed, the Companywill not be able to proceed with the Delisting and the Shares will continue tobe listed on the ASX. In addition, if Resolution 1 is not passed, the Companywill not proceed with the Buy-Back, which is conditional on the DelistingApproval being obtained.”

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Of course shareholders are not compelled to sell in thebuyback, but many will do so for the reasons below. Thus a potentially very largeshift of ownership and control will happen at a low price, which is clearlywhat the proponents are hoping.

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As another poster said, and as I posted earlier, the proposedBuyback at 5c is below 50% of NTA and below cash backing, so it’s valuing the restof the business as worthless. Yet the Board says the share price (at least when it was 3.1- 3.5c)was far below a fair value and I infer that they think it’s well above 5c!

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Given this (and Messrs Miall, Calnon and Dixon would have much better knowledge ofBDT’s value and its prospects than other shareholders, from their BDT executiveroles and/or directorships) the Boardshould have commissioned an independent expert report. Moreover, given theirgreater knowledge, they should not be allowed to vote on the proposals, especiallyin the absence of an independent opinion.

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In theory, delisting is only a nuisance for investors- not adisaster. Shares could still be traded off market but it would be harder andthere would be no forum to see the values of trades and prices for willingbuyers/ sellers. In practice, many smaller shareholders will be alarmed at the delistingand may decide that selling their shares into the buyback at a considerable discountto fair value (based on the Board’s own statement!) is the lesser evil versus nothaving a listed market. This pressure is onerous; the proponents would know thatand are probably hoping that many holders will decide to sell at 5c as thelesser of two evils.

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Finally it is very interesting to compare this proposal andEM with the EM which accompanied a similar meeting on 19 July 2024 (using thesame lawyers), held to approve the buyback of 31.5m shares by BDT from oneholder. Section 4 of that EM said “The Directors consider that an independentvaluation report is not required as that buyback price [also 5c] is well below recentmarket trading prices, and in 4d they emphasised that the price of thatselective buyback was approx half the cash backing per share. That opinion (notto get an independent report) was reasonable then, as ALL shareholderswould receive the benefit of BDT using some of its cash to buy shares (from onewilling seller) at well below asset backing. ALL holders would then benefit from the willingness of one shareholderto sell his shares back to BDT at half the cash backing. The circumstances todayare the reverse of that: the minority holders are invited by the Board to selltheir shares at well below true value. This time the Boardmakes no comment about not getting an expert report–in fact it’s worse than that- !

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If the Board is sure that delisting is commercially worthwhile,it could (and should) have invited Miall, Calnon and the few others who don’twant to sell, to make a formal takeover offer in the usual way, and the new ownerscould delist BDT afterwards. I believeit is extremely unlikely that Miall and Canon could have acquired many shares ina formal takeover unless it was at a much better price than 5c. Also theywould have been compelled to obtain an independent expert report, under ASIC regulations. This is a clever proposal but it appears to bedesigned to achieve a de factotakeover (not necessarily for 100%) without having to offer a higher price thata takeover would command, and it avoids the obligatory ASIC requirement for an independentreport. This is poor behaviour by a Board even if it satisfies ASX and other legaltechnicalities. BDT’s lawyers presumably believe that it does.

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For all these reasons I think that this proposal warrantsthe scrutiny of the Takeovers Panel as a case of “ Unacceptable Circumstances”.I shall vote against both resolutions. Irepeat that these are my own opinions; they are not advice to shareholders ofBDT.