John Jetter responded on November 3rd.
e-mail date stamps indicate that John is most likely domiciled o/s.
On the positive side his response was relatively quick.
And he states that Otto sought external legal advice.
My position was also based on external advice (discussion with a fund manager in another company)
I didn't respond as I was not impressed with the response for the following reasons:.
a) he use e-mail rather than zoom or phone.
b) John used a personal e-mail rather than an Otto e-mail. Possibly innocent, but it would be outside any audit Otto trail.
c) His assertion that my claim re. Molton holding is incorrect, is simply incorrect.
Either he is ill informed about Otto's main shareholder, and OEL history, or he is being deceptive.
Either way I was not impressed.
He continues stating that they expect a Tax Free CGT ruling. This is incorrect. The ATO may rule that part of the capital return in an unfranked dividend.
I still see this as a real possibility.
They also keep saying a return
upto $0.008, why not $0.008. Probably nothing to worry about, but it bugged me.
Anyway, I thought that John's response may be useful to shareholders.
Dear Graeme,
Thank you for your thoughtful email of 29 October. I would firstly like to thank you for your support as a shareholder. That support is greatly appreciated and much needed.
You mention that you acquired your shares recently, which implies that you purchased the shares after we announced a strategic review which may result in the sale of the company or its assets. I am curious as to what motivated you to become one of our main shareholders? Any feedback would be welcome.
With regard to the points in your email I advise as follows:
1. Re the return of capital currently planned of upto $0.008 our view is that a favourable ruling is highly likely given that we have no retained earnings for distribution. The only available Equity source funds for distribution to shareholders is from the share capital account. Whilst of course you are right in pointing out that the ATO retains a degree of discretion, we are proceeding on the basis of our view which has been reached with the benefit of legal and tax advice.
2. You also refer to future distributions. Re future distributions, no final decisions have been made. All options remain open to us, and those decisions will be made at the appropriate time.
3. You also refer to the position of Molton.
a) Let me firstly point out that the decision to make a return of capital at this time as the preferred method of returning funds to shareholders was a unanimous decision of the Board without any influence from Molton. The decision was reached after receiving external legal and tax advice, and is based on the considered opinion of the Board that this is in the best interest of ALL shareholders.
b) Otto Energy has several thousand shareholders, and the Board of Otto Energy cannot take into account the individual tax position of any one shareholder or any one group of shareholders. Hence our decision is based on the benefit to shareholders BEFORE tax, ie we do not take into account the tax position of the shareholders, which we do not know.
c) Whatever method of capital return we use, there will be some shareholders who are advantaged, and some who are disadvantaged, depending on their personal facts including when they bought the shares, at what price, and how they have structured their investments. We cannot take that into account. For example, shareholders who like you have bought shares after the last capital increase at prices above $0.008 and below $0.02 would be disadvantaged by your suggestion of a share buyback at any price above $0.008 compared to a tax free capital return at $0.008.
d) Whilst I am not authorised to speak for Molton, I would like to point out to you that your assertion that Molton owns 2,000,000,000 shares bought at $0.006 is factually wrong. It is a matter of public record that Molton acquired its position over many years by participating in all of Otto`s past capital raisings at significantly higher prices.
I am convinced that the Board has made the right decision and that a tax free capital return of upto $0.008 is in the best interest of all shareholders and treats all shareholders equally before tax. The after tax position is a matter for each shareholder.
Sincerely
JohnJetter
Chairman
(20min delay)