Ann: PGH Voluntary Delisting from ASX, page-16

Today’s announcement from the Pact Board reads as if it was drafted by Kin Group and its lawyers. Any pretence of having some independent directors on the Board has vanished. Remember that the directors (and Rem Report) received 99% votes of no confidence at the AGM, excluding RG’s vote

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This is the same bluster that RG bullied shareholders with ad nauseam last year, especially after he declared the 84c bid final. i.e. delisting was his only remaining tactic to beat shareholders into submission (hoping- but failing- to reach the 90% compulsory acquisition threshold) and he used it on at least 10 occasions with increasing stridency. Nothing has really changed since then, except that PGH’s results have improved.

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Today’s letter states: “The delisting is considered by the Company’s Board to be in the best interests of the Company and its shareholders in light of: • the very concentrated nature of PGH’s register, [this issubjective- there is a 12% minoritywhich is spread over 1500+ holders. There are plenty of cos with under1000 holderswhich have not applied to delist • the low level of trading of PGH shares on ASX [again subjective, and most daysthere is active trading in reasonable volumes. The volume of trade is determinedmore by the buy-sell spread that is sought ] • the cost of maintaining an ASX listing relative to the benefits associated with such ASX listing [as is usually the case with this excuse, theBoard does not quantify this cost in $$$. I expect the marginal extra cost of being listed, beyond what it wouldcost to be an “unlisted disclosing entity” is under $1m pa if calculated objectively.For example ASX listing fee is only $72,895 pa] and • the burden associated with compliance with the regulatory regime applying to listed companies. [Again how much “burden” is there beyondthat of being an “unlisted disclosing entity” which is something PGH cannotavoid?].”

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NB it says “best interests of the Company and itsshareholders”. I can see how they might argue that it’s in the best interest of the Company- to save work and money- but how can it possibly be in the interests of shareholders? This is delusional and misleading,

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It then adds “Additionally, the Board and Company management spends a considerable amount of time and resources on matters relating to PGH’s listing on ASX. The Board considers that a delisting would enable PGH to focus more on its business operations and on delivering on its long-term business objectives.” This merely duplicates point4. If PGH’s board and management are sodistracted by the “burden” of being listed they are conducting very inefficientBoard meetings, and senior managers are not doing their (very well paid} jobsproperly.

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This is a generic list of justifications that a co gives for delisting. However, in this case the PGH Board is indistinguishable from Kin. What Kin really wants to do, as it has said many times, is to get 100% ownership of PGH. It failed to get there, by underpricing its 2024 takeover. Eventually Kin will have to make another takeover offer- on or off market- to get 100%. My interpretation of today’s notice is that Kin wants to start delisting immediately it can after the 12 month delay imposed by ASX from the bid expiry. Kin hopes (yet again) that the threat of imminent delisting will drive many shareholders out and thus may also drive the share price down. If he can get rid of many holders now and achieve delisting, RG might find it easier to make a new takeover when minority investors don’t have the benefit of seeing real-time trades on the ASX. Prima-facie this makes sense, except that over 6% of the 12% minority is owned by the TIC founders who have a very good idea of value, and another 3% is owned by about 5 holders. Even if PGH is delisted Kin will have to persuade very experienced, sophisticated investors to have any chance of succeeding with a second takeover. They will not be bullied into accepting a lousy price

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In practice this delisting push is just more of the same; despite the bluster. I guess it is unlikely to cause more than 1% of the ownership (3.3m shares) to change hands. NB a shift in ownership is only likely to go other minority investors. Kin could buy those shares on market, and perhaps will: but if that is over 3.3m in aggregate Kin must disclose that fact.

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The Second Supplementary Target’s Statement on20 December 2023 stated

“On 20 December2023, Kin increased their holding to 80.01% of Pact shares). Kin ..…intends to [delist] Pact as soon as it is able to do so, noting several conditions would need to be met for this to occur as set out in section5.6 of the Target’s Statement. With its current level of shareholding, Kin has satisfied oneof the conditions required to achieve a delisting (although there are other conditions includingthat the number of shareholders with shares to the value of $500 or morereduces to less than 150).” The register now showsover 1,000 PGH holders with above this value of holding. If ASX adheres to thiscondition, and for Kin to succeed, that would require 85%+ of currentshareholders to give up and sell their shares to Kin or to other holders withina group of fewer than 150. That is very unlikely. Over 1,700 investors refused to accept the last takeover, even under the threat then of delisting.. Why would almost all of them cave in now, faced with the same threat? Even if ASX doesn't enforce the 150 holder condition PGH mustcomply by law with the obligations of being an "unlisted disclosing entity" if there are 100+ holders.

Thereare grounds for saying that the proposed course of action is oppressive pers232 of the Corporations Act and “unacceptable circumstances” for the TakeoversPanel. Kin’s intention (feebly abetted by the Board) appears to try to frightenholders ahead of an eventual takeover, even if that is delayed several months,and at a low value.

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PGH’s other announcement today was a trading update.That showed higher profit and some potentially beneficial other plans—refinancingthe debt and perhaps selling Asian operations (more profit and more cash). Capex is still high, but must eventually settle. The update did of course raise the ugly face of Trump tariffs, but otherwise it was positive.

Sorry this is so long- but why should PGH investorshave to post on HC to do the Board’s job of defending our interests with aproper analysis?

DYOR. NOT advice, but I will not sell