TCN Proxy Form - VOTE NO.pdf
TL;DR If you don't want TCN to be delisted then print and sign the attached proxy form and lodge your vote.
Almost a week ago Techniche announced its Request for Removal from the ASX Official List. The Board offered four reasons (shown below with response) to support their proposal. In the five days since the announcement TCN shares have dropped more than 30% in a clear protest vote against the proposal and against the promising trend of the past six months where the share price had (finally) started to climb.
The legal remedies available to shareholders (applying to the Court or the Takeover Panel for relief) are of course completely impractical for most small individual shareholders and the Company's intention to resume its on-market buyback to a total of up to $500K (as compared to the pre-announcement market cap of ~$12 million) is derisory.
In short, the only possible way for holders to prevent this delisting is to vote against it.
Below I've outlined the reasons/claims made by the Company for why this drastic step is necessary and offered in my opinion a logical rebuttal for each. Others will no doubt have more points and counter-points which can also be shared.
TECHNICHE BOARD: "The price of the Company's shares is materially and consistently lower than the underlying value of the Company."
REBUTTAL: What is the Board's view of the underlying value of the Company? This has never been expressed and is offered by the Board without any further evidence or justification which is very weak. The kind of strong valuations that they're clearly seeking as a SaaS type business are predicated on actual growth (which has always been anaemic) and a better narrative on where the Company is heading than the Board has ever offered.
Furthermore they've taken this step just when - for the first time in years - the share price actually had positive momentum (or at least did until this announcement). It's almost as if they don't want the price to run too far...
TECHNICHE BOARD: "This limits the ability of the Company if it wishes to raise funds as the current valuation would have a material dilutionary impact on Shareholders."
REBUTTAL: The Board is claiming that it is impeded from raising funds but yet in the announcement of the AGM it makes the following completely contradictory statement:
"Balanced against these considerations is the fact that the Company has sufficient capital for its needs, has sound revenue income, and in any event is not proposing any fundraising in the foreseeable future."
So why the hell is it delisting the Company - and why now - if capital raising is not really an issue...?
TECHNICHE BOARD: "Low liquidity levels in trading of the Company's shares has resulted in limited trading opportunities for Shareholders."
REBUTTAL: It is true that liquidity is very poor and trading opportunities limited for TCN shareholders (God knows there's plenty who would have liked to get out over the years!) but a delisting won't solve this problem - quite the opposite it will greatly exacerbate it and shareholders will have virtually no prospects to exit.
The solution doesn't fit the problem!
TECHNICHE BOARD: "Removal from the ASX official list will allow the Company's board and management to reset the Company valuation and will open up the potential for alternative private market valuations, funding alternatives and strategic transactions as the Company executes on its business strategy."
REBUTTAL: Again the Board provides no reasoning or justification for why being delisted will increase the likelihood of any of these laundry list of wishes (reset valuation, funding alternatives, strategic transactions, etc.) coming true. Any of these initiatives are possible as a listed company and shareholders would surely support them if the Board and Company were capable of executing on them. It's already been shown in the past six months that the market will take notice and respond to good news from TCN and being listed surely cannot be what has held the compay back for so long.
