As a shareholder with a very large number of shares (>1mill), I have followed the progress of what has happened over the past few months with a mix of anger, annoyance, despair as well as hope and optimism.
The reason I bought the shares in the first place was because the net asset value of the company was far greater than the value of the shares - that has not changed in the past 3 months. I have applied to both IMF and Slater and Gordon for their information packs and must admit that after taking the time to consider things, I tend to agree with the Slater and Gordon approach - which is basically wait and see what eventuates when the company resumes trading or goes into administartion before deciding to sue them - don't anticipate the outcome as the process will be long and definitely not cut and dried. This contrasts heavily with the hard sell approach by IMF which is register by the due date or you will miss out (the same scare tactics used by door to door sales people in the past). The bottom line is that the lawyers (& litigation funder in particular) are not suing Oz minerals for the benefit of the shareholders - they are there to make a profit for themselves and the only way that they can do this is to sue the company "on behalf of the shareholders" and then take a large (probably >50% of any money that youdo end up getting back (probably in several years). If they were fighting for the rights of the shareholders, they would be suing the incompetent management who have got OZ into the current mess - but they won't do this because if they are successful they will make far more money from suing the company which is where the money resides. An analogy would be to loan your car to someone who drives drunk and crashes it and then you sue your car (which you already own) because it is worth more than the idiot that pranged it. To then rub salt into the wounds, if you are successfull, you will fund both the legal costs of both parties as they will come out of the value of your car if it is found liable.
Oz Minerals is not an ABC or Babcock or Centro where the value of debt due to various accounting practices far exceeds the value of the shares - the opposite is true with Oz Minerals - its core assets, even at fire sale prices are worth and with all debt paid off are worth >$1 per share from even the most pessimistic analysts
Bottom line is that I would be extremely surprised to see any of the institutional share holders join a law suit at this stage upon the informed advice of professional inhouse legal teams - it makes no sense to sue something you already own and pay to sue it and pay to defend it - even if you win, you won't get anything back for years, and a large scale law suit does have the ability to negatively affect the share price long term while it is underway - who would want to buy / takeover a company if its got a cloud of unlimited liability with an open ended law suit hanging over it - there goes one of the immediate resolution options for shareholders when we start trading again - or any takeover is done at a large discount to actual value.
For the law suit to get legs, it requires for lots of small shareholders to act like startled sheep and do one of the dumbest things I have seen in a long time if they join up at this stage - Think about it - you're effectively suing yourself over something you already own to get a fraction of what it is effectively worth back in a few years time !!!
OZL Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
