I met with a director of FMS earlier today along with two other...

I met with a director of FMS earlier today along with two other shareholders and advised the director of my deep concerns of the proposed Agreement and the FMS leadership that has bought shareholders to this point. I, and two other shareholders, listened to the director’s response to our concerns and the director’s points of view regarding the merits of the proposed transaction. We completely disagreed with the director that the proposal was in shareholders best interest. I believe the Agreement falls way short of my, and others, expectations I will vote against the transaction after this post.

IMO the base royalty is way below reasonable and should be at least in the order of 8-10%. The overall deal is way to complex. According to the IER the deal could be renegotiated at FID without shareholders approval without shareholder approval. This is not acceptable. There is no promised modelling or projections that show what value “may” be added should the transaction be approved. There is no certainty. There is no verification of the cost of revenues, BFS, or in fact, other cost involved. The risk outlined by the company in the document are totally unacceptable given what appears to be the vague illusion of reward IMO. The absence of a substantial upfront payment is a major issue. No substantial upfront payment = no deal (this was advised to directors in the last roadshow but it seems, ignored). This is not negotiable IMO, as is the base case royalty that MUST be in the order of 8-10% given that FMS PIOP IO underpins the entire project and pays for the BBI infrastructure that has a life well beyond PIOP and will bring in billions of $$$$ revenue for BBI and likely make substantial BBI profits.

The shareholders message to the director was to pull this proposal, go into care and maintenance, and, in the absence of a realistic offer, to seek an alternative proposal by others (eg MRL). After all, if the Railway License expires in September part of the rail corridor may become available to FMS or others MRL?).

In short, I have no problem with BBI taking all of PIOP, BUT it must be more beneficial to FMS shareholders than the current proposed deal otherwise I call for the company to go into care and maintenance whilst pursuing an alternative agreement. I particularly note that Brockman decided to do a JV with MRL and not proceed with the BBI MOU.

IMO BBI needs FMS as much as FMS needs BBI and any deal needs to clearly show a premium for what FMS brings to the overall deal. The proposed deal in no way shows any premium or really sufficient safeguards for FMS shareholders IMO. The current offer falls substantially short of providing a premium for FMS, more like a few crumbs. I’d suggest that BBI’s ability to strongly negotiate is in fact an impediment to the project happening at all. Totally unacceptable to minority shareholders IMO, and will remain so. Absolutely no chance of being accepted IMO.

IMO, no deal is a better outcome. Win/win deals are always most desirable but the current offer seems to me to be so far BBI win and FMS lose. It is better to stop negotiations and accept the lose/lose scenario until the other party comes to its senses or find an alternative IMO.

For BBI, no deal = no project = no rail corridor = no massive profits. For FMS? No deal = not much change and maybe new opportunities with another company.

I AM VOTING AGAINST THE TRANSACTION.

Now, don’t take my word for any of the above as the way I see things and evaluate things may be wrong or misguided. Make sure you do your own research and seek your own financial advice. Corrections, comments and corrections are always welcome.