AllI spoke to one of the advisors to HDR from Emerald Partners...

All

I spoke to one of the advisors to HDR from Emerald Partners and gleaned the following....this is not a transcript and I am not advising....anyone reading this should get their own advice as this is merely my interpretation of the discussion...

1. Can TLW buy on market? - Yes

2. Is TLW limited to the SOA price of $2.02? - No, they can pay more if they wish. The view expressed to me was that it would be unlikely TLW would pay more than the SOA price on market because they expect to get the lot after the SOA vote at the SOA price. It was commented that the main reason bidders may wish to use an SOA approach is because it gives them certainty...my interpretation is it gives them 100% on success and zero on failure (no failure risk). In fact, the advisor commented to the effect that TLW may not have bought any shares to date. If they had reached the 5% disclosure level they would have to reveal in terms of regulations within (he was not sure) 3 trading days.

3. Can TLW vote its holding (if it has one) for the SOA? - Not sure...will get back to me. He commented that this is a good question and one they would address in the explanatory memorandum yet to issue.

4. If TLW is buying on market are they restricted to 19.9% without making an on-market bid? - Yes, they are said to be bound by the normal regulations for on-market take over activity.

5. If they are not limited to 19.9% under the legislation, could TLW acquire a controlling stake of say, 30+% without making a formal bid other than the SOA? - Not applicable in view of answer to question 4.

By way of observation, I would comment that the possibilities seem very broad, but the advisors seem to be restricting their thinking to a concept that TLW would not wish to take much risk with their bid by buying any/many shares on market, even at the bid price. I'm not sure that makes total sense because it seems to be predicated on the assumption that they don't need to work hard to win this contest (?). Of course at this stage it is not a contest except with shareholders.

The advisors seem to be expecting institutions to sit and wait for the outcome or a competing bid to emerge.

There are apparently reasonable legal obligations for TLW to sustain its bid to the vote. If not there would be avenues of litigation for HDR to pursue.

I got the impression that the advisor thinks this is a great deal for investors given the premium to recent market prices...I made it clear that any investor who knew the assets would not think it was any great deal, other than to TLW.

regards
DF