Ann: PGH Voluntary Delisting from ASX, page-20

In my previous post, I quoted the text ”(although there are other conditions includingthat the number of shareholders with shares to the value of $500 or more reducesto less than 150)” from the Target Statement published by PGHitself (as required under takeover law) which would have been carefully checkedby PGH’s lawyers for accuracy. My understandingis that that rule is a general condition of being able to maintain a listing.ASX has only given in-principle consent to PGH to delist- subject to a vote andvarious conditions including (but perhaps not necessary limited to) thosestated. We can be certain that ASX has notgranted an exemption from the point in red as Kin would have boasted about it.

If the PGH Board was doingits job properly it would have confirmed and discussed such rules for the benefitof all shareholders, rather than issue a one-sided letter for Kin’s benefit. Theletter may be technically correct but it gives only part of the ASX picture,and only a tiny part of the broader legal and commercial context. I am not surprisedthat investors are confused: if Kin had written the letter on its own letterheadpeople would be on guard to treat the letter as biased and representing a negotiatingtactic from Kin. Because it was from PGH, investors may fall into the trap ofthinking that it was objective, fair and complete. It is not, and the Board should be ashamed. Ratherthan kowtowing to Kin, the Board should spend some money on good legal adviceand send it to the minority shareholders.

Given what I said above youmay be surprised that the PGH letter mentions the relief of “Remedies available” (which is relevant tomy Para below). It was not a voluntary disclosure: PGH is compelledby ASX to provide that warning material.

The main concern is that ASXhas not imposed voting exclusions, so Kin can vote on the resolution. With 88% Kin will win the vote. However, that is not the only thing RG needsto satisfy for ASX to grant delisting. Also,and much more importantly, this must be seen in the broader context. It is obviousthat the push for delisting is coming from Kin even though PGH issued the letter.It is fully consistent with what Kin said many times last year. It is impossibleto separate Kin’s push for delisting from its desire to reach 100% of PGH,which can only be achieved by making another takeover and/or using oneof the two paths to compulsory acquisition allowed in the Corporations Act. I haveposted about these several times before on HC: both of them will be very hardfor Kin. However, the crucial and immediatepoint today is that delisting is obviously being pushed by Kin, the 88% holder.The Board can’t be said to be acting independently. This highlights the likelihoodof oppressive behaviour by Kin against minority holders and also by dominatingthe Board. This raises serious objections that can be made to ASIC, the Court andTakeovers Panel, and also to the ASX if it decides to give Kin a green light. Delistingis about softening up the shareholder base for an eventual second takeover,even if that is a long time in the future. As I said before, the delisting pushis pointless anyway since at least 8 or 9% of the 12% minority is held by veryexperienced investors who will put up a tough fight. If delisting happens yes it will be a nuisancebut it won’t advance Kin’s chances of getting 100% without paying a fair price. I don’t really understand why RG is pushingit so hard- the mere absence of a listing will not change investors’ demand toreceive fair value- even if we have to wait 2 or 3 years to get there.

Puppyeh has written wellabout these aspects today.

I have over 500K PGH sharesand I have no intention of selling at these prices. I bought 30K more yesterday and 20K today.

Not advice. DYOR.