As I'm sure you all know, the Pact executives signed a 'best...

As I'm sure you all know, the Pact executives signed a 'best endeavours agreement' which in effect means that they have committed themselves to support and promote the takeover bid by RG and do nothing to undermine it. This agreement therefore means that the executive, and the independent executives in particular, have opted to support one shareholder to the detriment or disadvantage of all the other shareholders. However, company executives have statuary obligations under the law to ensure that the rights of all shareholders are upheld and protected equally. Under the Australian legal system it is not possible to circumvent, undermine or negate these obligations by private agreement. Therefore, in my opinion, the best endeavours agreement has no valid legal standing.

The two independent Pact executives held themselves out, and on that understanding were elected, to protect the interests of minority shareholders. This they did by issuing an independent report on their estimated valuation of the company. At a later date they issued a notice recommending the takeover offer at the lowest point of their price range and this was done in accordance with their best endeavours agreement. They have not been heard from again until the arrival the other day of a statement which read in part:-

'Pact’s share price has recently traded on ASX above $0.84 per share. If that persists, shareholders may need to carefully consider if selling on market (after brokerage and other costs) might achieve a better outcome than accepting the Revised Offer of $0.84 per Pact share.'

The share price has RECENTLY traded above $0.84? Where have these people been? A holiday on one of Jupiter's Galilean moons was it? Well, if you're going back, remember to give a big “Hi There,” to the life forms on Ganymede and Callisto from us shareholders. Our executive members clearly hadn't realised that except for a few nanoseconds, the Pact shares have consistently traded above 84 cents. Indeed, to buy a share on market at 84 cents has been a lot more difficult than buying a ticket to a Taylor Swift concert. So why this statement at this time I hear you ask? Remember, these executives have signed a binding agreement of 'best endeavours', so anything they say must have the approval of RG. Could there be some Machiavellian plot in play here?

The subject of the employee shareholdings has also been raised with, we understand, one ex-employee receiving a cheque in the mail despite never agreeing to the sale of their shares. Employee share schemes are designed to encourage employees to become shareholders so that they take a financial interest in the health and prospects of the company. Conditions apply to these schemes, one being that the shares are issued at a discount to the prevailing share value and there can be limits on the number that can be purchased and when they can be sold. Another condition that could be attached to these shares is that if there is a takeover offer that is supported by the board then all the shares will automatically be eligible for transfer without reference to the individual share holders. I guess all these shares have now been sold.

As for the future, I believe the time is fast approaching for minority shareholders to think about what the remaining shares are really worth, particularly if we achieve a solid 10% hold. Most observers acknowledge that 84 cents grossly undervalues the company. And frankly, I don't think much of a value round the $1.20 mark either. Remember when Manipur were taken over the shares they received were valued well over $5. So when it comes to bargaining, that is the starting point; $5.50 verses 84 cents. And also when RG was quietly increasing his share holding prior to the take-over, he was buying at well over $2. So I think we need to get real about this.