AZM - Why I might stay on for the ride

I was surprised to hear that there were no less than 4 of 5 general partners of Ibaera at the AZM AGM yesterday. Bit early for a victory party. I think I might hang out for a higher offer for my shares. Here’s why…

Given that Ibaera have apparently enticed all the major shareholders into the offer but still only have 62% I make three observations…

1. The 90% compulsory acquisition target seems a long way off.

2. Despite dire warnings of the consequences of shareholders who don’t sell to Ibaera becoming minority shareholders in a delisted company will this really occur? Ibaera may yet reach 75% but don’t they also need to reduce spread to 150 shareholders? Given that shareholders outside of the “major shareholders” hold potentially a whopping 38% there is a lot of mopping up to do.

3. The ASX specifically calls out that an unacceptable reason to permit delisting is if it is being done to “deny minority shareholders a market for their securities in order to coerce them into accepting an offer from a controlling shareholder to buy out their securities”. Sounds familiar – something rather similar to that in the Bidders’ Statement?

So what happens? Speculation of course but…

Offer closes. Ibaera have a majority holding in AZM and so also the project. They are working hard to complete the feasibility study which was due in January. As remaining shareholders we can look forward to any price sensitive news being made available, you know, such as a completed feasibility study.

While we wait for that and see the market reaction we will get closer and closer to the 4 month date after this offer closes when Ibaera can make another better offer. Claims that they can’t improve their offer after declaring this one “best and final” keep forgetting to caveat that this only applies for a lock out period of 4 months.

Let’s face it US capital looking for a home in AUS based resource PE funds want their returns and returns are affected by the passage of time. Ibaera aren’t mine-owners and probably don’t have patient enough capital to hold on through development. They need to find a home for this project but to do so they will need to bring along the minority shareholders with them.