re: Ann: TKG: Ratio for MNC In-specie Distrib... Oberte,Don't...

re: Ann: TKG: Ratio for MNC In-specie Distrib... Oberte,

Don't worry too much about this distribution, it will have little impact on the MNC share price:

TKG held (as of April 2, 2012) 153,400,000 MNC shares
TKG will distribute ~73,878,320 MNC shares to its shareholders; of this
TKG will distribute ~53,919,100 MNC shares to its top 20 shareholders

This includes Notesan, Sentient and Mining Investment Services which are already on the MNC register and are not likely to sell.

That leaves 19,959,220 MNC shares distributed to smaller shareholders. If 50% of them decide to sell it means 10,000,000 shares will come to the market and that is a volume that can be absorbed in a few days of trading.

TKG has actually reduced the number of shares it is distributing given the low price of MNC shares.

My interpretation of this and the hurry to distribute prior to June 30th is that TKG wants to realise a loss on disposing of MNC shares to offset the deferred tax liability it carries in its balance sheet (from exchanging Hampton shares for MNC shares).

At a lower MNC share price the loss TKG recognises is greater and thus the lower the number of shares it has to dispose of to wipe out its deferred tax liability, all this whilst the majority of the shares simply go to the TKG top 20 shareholders. It also helps to keep some disgruntled minority TKG shareholders happy.

The drop in share price has in my opinion had a greater connection with the overall market sentiment (risk aversion) and drop in copper price.

The result of the elections in Greece and the proximity of the end of financial year are likely to have a greater impact on the MNC share price than this distribution by TKG.

Alejandro