Here's a summary of manegment's answers to questions at today's GM. My comments on their "responsiveness" and on Andrew Sigalla are probably best kept for a separate post. John Falconer was Chariman and answered many questions well, others were answered less convincingly by Andrew Sigalla. The small audience had lots of questions so I wasn't the only one being a pain in the ar*e!
1. They contended that the reason we were not given more detail of the NASDAQ move ahead of the meeting is that the strategy is still being developed and that it is in the hands of CS and being driven by them. They were advised by CS to consolidate ... so they have.
2. Regarding TZ's languishing share price and lack of promotion they said that the local market simply doesn't understand TZ and local brokers are uninterested in providing coverage .. hence the sooner they move to NASDAQ the better. There will definitely be coverage by Credit Suisse closer to the NASDAQ move.
3. On the 5:1 consolidation my impression was that were were once again simply told to "read between the lines". AS confirmed that the $1.27 that Acument accepted is somewhat of a guide and that CS based it on a sound analysis of forward projections and likely NASDAQ valuation. But he would not say that US$5 was the target .. it was a difficult reponse to interpret but I think he was implying that the US share price could be around US$5 or it could be higher. Asked whether it was realistic that with the sp at around US$2.30 equivalent the sp could reach US$5 by the time of the float he intimated that there were many good reasons to think this would be easily achieved. They had looked at all options and considered a 10:1 consolidation but were advised by CS to do a 5:1 .. so do your own analysis on what that implies.
4. When asked about the acquisition being considered AS would only say that it would be value accretive and it help with TZ's attractiveness at the NASDAQ float.
5. JF said that the timetable to NASDAQ was unknown but they are moving things along as fast as they can. He indicated that it would most likley be towards the end of the year or early next year.
6. I pushed them on whether there would be a significant capital raising when the float occurs and whether any acquisition would be by way of equity or debt ... these raise concerns about dilution of exisiting shareholders. They were unable to comment on the structure of the float and what degree of capital raising will be involved (its in CS's hands!) and would not comment on debt vs equity in any acquisition. ON the issue of dilution JF contended that if te sp was much higher then there is really no dilutionary effect..... hmm not too sure about that!
7. It will not be a backdoor float (so the acquisition target is not going to be the vehicle).
8. Yes it will be a delisting from the ASX. JF thought this was stated at the AGM.
9. AS seemed to indicate that yes there will be an offer from CS closer to the time of the NASDAQ float as some local shareholders will not want to hold NASDAQ shares. He said "CS will stand in the market" and make an offer at that time. He could not provide any clues as to how it might compare to the eventual float price. I pointed out that CS could be in the market now gobbling up cheap shares and he quoted another recent case of Chinese walls failing and brokers getting into trouble doing this .. imtimating that he didn't believe that CS would be doing the same.
10. In terms of who might be acquiring shares JF said that ANZ Nominees now had 40m shares (compared to 18m in the last AR) but of course it was not possible to know who the real owners were. I though that was interesting!
11. Both AS and JF implied that they are expecting a much higher share price on NASDAQ compared to current. AS said that the Acument deemed price of A$1.27 was based on sound valuations and if the local market couln't see that or was unresponsive to that reality then waht can they do about it??
12. I commented on the inaccurate reports in January that TZ now had 560 staff .. JF confirmed that they actually only acquired 6 or 7 key Acument staff. It appears that they picked the eyes out of the IBU staff and took on the most important staff...around 60% (so the IBU staff was always quite small).
13. There is no arrangement or deal regarding TZ's access to Acument's world-wide network. But they are confident TZ will still have access to them as a client.
14. As to whether there have been any Intevia sales .. JF answered yes but onluy small and recent. TZ does have a number of products in production "trains" but the lead-time to sales canb bne quite long. Timing of tye NASDAQ float later this year might be somewhat linked to follow through sales of these products.
15. On why there was still not freer and better communication with shareholders they said they are still subject to restrictive agreements with major clients that require confidentiality. When I asked whwre the "huge" interest was coming from we were told to once again "read between the lines". That is ... lots of logos of companies they are dealing with were in the AGM presentation .. sop these are the potential clienst (and other companies not on the list of logos are not currently .. was the implication).
So ..... many questions answered and overall a worthwhile experience. AS needs a personality overhaul though .. that's all I will say on that.
Cheers
H
TZL Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)