ctp, takeover and options....

Just some thoughts on a Sunday night.

Some of you might remember these tables:

Tranche No. of Price per Total per
Options Option Tranche
1 48,418,169 $0.022 $1,065,200
2 55,335,051 $0.027 $1,494,046
3 69,168,813 $0.024 $1,660,052
Total 172,922,033 $4,219,298

Tranche No. of Options Exercise Vesting Expiry
Price hurdle Date
1 48,418,169 $0.09 $0.15 15 November 2015
2 55,335,051 $0.09 $0.20 15 November 2017
3 69,168,813 $0.09 $0.29 15 November 2017
Total 172,922,033

This is the number of options that will be available to RC's company "Freestone" to buy. (I think the expiry date for the 3rd tranche is incorrect, but I have copied it verbatim).

So currently we have passed the Vesting Hurdle for the first tranche, giving Freestone 48M shares that can be exercised for 9c each.

To exercise them would add $1,065,200 + $4,357,635.21 (cost of shares + cost of exercising) to CTP's bank balance. RC has talked about calling in options which are in the black, so I would expect him to do the same for his own.

Most of you are probably aware that CTP requires 90% of shares to be bought out for a takeover to occur.

(Some have wondered why someone doesn't buy 90% at the current market price - simply put, very few shares are for sale at the current price, the current price just being the minimum amount anyone was prepared to sell for).

To get to 90%, a lot more than 17c would have to be on offer.

Some have suggested that there are rumours of a takeover planned at 50c.

Should CTP go above 29c, then all the options to Freestone come into play.

If those options held by Freestone were exercised then they would hold over 10% of the company. (1.5B shares on issue, 172M owned by Freestone. Of course, to exercise those shares would cost Freestone almost $20M;

With more than 10% that would mean that any takeover could be blocked by Freestone.

So at that point the question becomes "Would Freestone hold, or would they perhaps try to negotiate an above-market premium?"

For myself, I sincerely doubt:
a) Freestone would sell to a takeover for ~ 50c;
b) 90% could be acquired for ~ 50c, if Freestone didn't stand in the way;
c) That only one interested party would come to play should a takeover attempt begin.


Thoughts?