Your comments or rather their tone, made me consider the announcement may imply a different outcome to what others are suggesting including the media. I read the media articles and they were just full of speculation ie they really had no idea what is going to happen.Let me look at today’s announcement closely and also consider some logic.
The key words in the announcement were ‘change of control’ plus one other word considered below. Change of control means owning 50% or more of a company’s shares. It does not necessarily imply there is a takeover. In fact, it suggests it is not a takeover as a takeover is for 100% of AZS shares.
The other key word is ‘change of control TRANSACTION’. That is one buyer/seller as it is singular and does not mean a takeover.
Now consider:
-Creasy owns 13% (its not 16% as I checked) of AZS and 40% of Andover – that does not translate to 47.8% of AZS as AZS also owns different % of 2 other projects at 70% (Creasy 30%) and 100% of a 4th project (Creasy 0%). This may complicate matters as does the $133m cash AZS has.
-AZS is fully funded for Andover to FID. Hence Creasy does not need to contribute one cent before FID whether he owns 40% of Andover or sells his 40% to AZS and becomes AZS’s major shareholder. That is, there is no barrier to Creasy selling his 40% to AZS
-Tax is always an issue in transactions – for Creasy the sooner he sells or really transfers his 40% to AZS the lower his CGT bill as the AZS SP is only going to increase a lot more over time
-The change of control transaction is occurring just after the CR was complete on 11 October with the cleansing notice that takes AZS through to FID. A coincidence? I think not. It is also no coincidence that the CR was sufficient to see AZS through to FID as it does away with any barriers Creasy may have to sell his 40% Andover ownership into AZS
-Creasy has full access to all details of the Andover project – SQM, as Tony has made clear, is just like any other AZS shareholder and only has access to publicly available information which is really quite limited. Creasy knows exactly what assays results are coming down the pipeline
-Tony was very upbeat in his latest presentation about upcoming TA 1 results and for TA3 too plus the latest announcement was very positive towards TA3 potential (I also noted @JedClampert comment about rumours of massive hits at TA3 which if true then Creasy will know about them). Creasy better get in now before the SP goes up a lot more flowing from possible great future announcements.
-The transaction is more complicated that just selling 40% of Andover into AZS as Creasy may need to add some cash to achieve 50% but for someone of his financial capacity it is not much to move to 50% - e.g. 2.5% of AZS is less than $30m. Plus there are also the other projects AZS owns and the $133m on AZS balance sheet to consider.
Positives if Creasy sold his 40% Andover to AZS are:
-Makes AZS bullet proof from any takeovers unless Creasy sells, and he will demand a big premium if he does sell
-If Creasy gets 50% of AZS at such an early stage that tells one how confident he is about the Andover project. It is a massive vote of confidence on Andover
-Other shareholders including us poor (relative to Creasy) sods get the chance to see full value emerge from Andover instead of AZS being sold for a cheap price. This is a massive positive
-AZS will probably move into the ASX 200 in next relevant rebalance which will have a positive impact on the SP.
Downsides:
-Takes away and takeover premium in SP that may exist. Over time this is a minor disadvantage.
While I am happy to be wrong, the above logic and analysis suggests Creasy is selling his 40% of Andover into AZS. I assume the transaction will need AZS shareholder approval. Many months ago I suggested Creasy would make such a move but it has come a lot earlier than I expected – if I remember correctly it was my favoured outcome based on researching his historical moves.
Lets see what the announcement states either tomorrow or Wednesday.
