I want to say first, I'm not being critical here about the initial to AMAL allowing them to piggyback on Tawana's hard work and get this operation rolling even though I thought the deal very favourable to AMAL. That was, after all, in the key, original terms and conditions for the deal from the outset. But it seems to me that this new, proposed agreement is again offering AMAL another leg up that I don't see them deserving.
In essence, I see it as AMAL being gifted half of the value of a project with no proper consideration of the operational value increase of the entire plant and ongoing system accrued and synergised since the initial farm-in amount that TAW contributed. No accounting is made of the value of the network of contractors, vendors, suppliers and local establishment of the project that has intrinsic value fas beyond the project set-up cost. So many intangibles are also being disregarded from Tawana's side when factored into the merger.
Mark Calderwood is more than just an employee, and just as SBM's Bob Vassie was enticed onto the board with the offering of a large capital offering, so shouldn't AMAL be offering up something in turn for the privilege of acquiring 50% of of the talents of not only Bob but Mark and others as well? What demonstrated value is Tawana to receive from the AMAL side? There isn't even any consideration of the brand value that Tawana has accrued.It's not Coca Cola but why is the entity being dumped for AMAL for zero financial consideration?
People claim that the deal being a 51-49% deal doesn't really matter. If so, then why demand it? All it demonstrates to me is the egos on the AMAL side seem to have had some upper hand in the negotiations. But the share price tells us another story. Initially AMAL's SP was much higher than Tawana's but then slumped consistently lower. This is from the market realisation that Tawana effectively is the project with AMAL just trailing behind on a rope. They should be lucky to get more than 33% of the project, IMHO.
I include below a list of considerations that I posted before so as to roll most of my arguments up into the one post:
Rebuttal of stated Pro's
1. We get greater exposure being the only Li listed company in Singapore.
This is what I'd call a hopeful intangible. Brokers in NY or HK aren't going to be swayed by where the PDF was emailed from.
2. The share price will eventually benefit.
The same would be true if we just burned a Million dollars in the car park. It was always going to improve anyway. Doesn't mean the merger is a good idea.
3. As a single entity we'll get greater access to finance.
Again, an ephemeral, hopeful intangible. AMAL doesn't provide anything to the operation except probably some assurances they've made about how they're going to "help" somehow. We can only hope it isn't assistance like that of their last CEO, Mr. Pramoko, whose share shenanigans weighed heavily on the price performance of Tawana's stock on 2 occasions that I can recall.
4. Cost savings
What AMAL do with their share holder's money is up to them. They don't contribute anything significant to the operation anyway. Flipping them one nickel in value is a nickel lost.
Further, I would say that listing on 2 exchanges is like placing 2 collars on the same dog. Whichever is the most restrictive in act would be the one that applies. And whichever offers the greatest loopholes to any future possibility of poor outcomes like a hostile takeover would also apply. It does no real benefit to Tawana and just seems to be another acquiescence to an AMAL localisation demand.
So I would say the only benefits offered by AMAL are extremely thin gruel with no numbers attached at all while Tawana has a demonstrated, growing plant, personnel and operational value with guaranteed revenues and top local expertise. AMAL doesn't have any value-added input to assist with that I can determine. AMAL are not in a bargaining position here.From a purely pragmatic, business perspective, what pushback did AMAL make to bring Tawana to the table? The only leverage they have is to refuse to merger. To which I say, fine. It seems to make no extra cost to Tawana that this deal doesn't already incur and then Tawana gets to keep all it's intrinsic value and self-control.
I think AMAL's only mistake here (and one they probably couldn't avoid) was to allow a long lead time between the proposal and the finalisation of the deal because over time, as people examine and consider the facts, it doesn't stack up. Like everyone, I believe Mark Calderwood is an excellent geologist and project leader but it would be unreasonable for me to expect a similar transfer of competence to the field of corporate lawyer and skilled business negotiator. That seems to be AMAL's forte.
The key idea of a merger between equals appears to be something AMAL would insist upon more than Tawana. If AMAL disappeared tomorrow, the project wouldn't suffer a day's delay. But if TAW disappeared, AMAL would be practically worthless. And yet they are to merge as equals? In short, it's an unreasonable giveaway and as it stands I will be voting a hard "NO" and urging other fellow Tawana holders to do the same.
Tawana investors trying to come to some decision on the agreement on this forum should also consider that some of the posters on here who are in full-throated roar in support of this deal are probably AMAL holders. And of course, why wouldn't they be? This deal is great for them. A simple click on their name in the left column will list all their previous posts and show how long and how often they've posted on here. Many seem quite recently or sporadically involved only.
On that score, please note for myself, I've been an accumulator of Tawana stock since 11.5c to now holding somewhere over 1 million shares. I think I've been a reasonably astute investor here. I hold no AMAL and my loyalties lie only with Tawana. If any Tawana holder shares any of my concerns about this deal or has other points they wish to add, lurking from the sidelines will not favour you. Often these incidents fall under what is called "the tyranny of the extroverts". Those that speak the loudest often get their way. I encourage anyone else to speak out with points they are concerned with.
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