What happens to PGH now has been debated in many posts on this...

What happens to PGH now has been debated in many posts on this forum, especially before the bid expired. I have written many: pls see extracts below to some highlights. Others may well disagree with me. This is not advice but I’m setting out what I think are important considerations.

The future for PGH’s price depends on two major aspects: what is the fundamental value of the business, and what are the likely actions of the bidder, RG, who had 88% at the bid expiry. In my first post below I highlight that the 84c bid price turned out to be a PE multiple of only 6.5x actual underlying FY24 earnings per share. Barring any major and unexpected misfortunes, I believe 84c materially undervalued PGH. This is only my opinion but I have bought nearly 200K PGH shares since the bid expired.

In a normal market without RG’s 88% ownership 84c would be well below fair value. However, as you have rightly noted, RG’s future actions have a huge bearing on the future price. RG is Chairman and 88% shareholder: he has strong incentive to help the business do well, both as a director and shareholder.

I have said before that I’m convinced that RG will eventually want to make a second bid to mop up the 12 % minorities. Despite his sour comments during the (first) bid, he has moved from 50% to 88% at the bargain price of 84c. His next purchases will be more difficult and expensive. I assume that all the 12% remaining holders decided to stay in PGH because they thought it was worth more than 84c. The end game for RG is more complex and challenging than the (first) bid. I explain some of the considerations in my third post below. He appears to be very keen to get to 100%; and he has another difficulty, the pending litigation by TIC for $30m which holds 6.5% i.e. over half of the 12% minority shares. I believe he will have to negotiate with TIC and the other top 4 or 5 holders, to discover a price at which they would be willing to sell. By 31/12 he would be allowed to buy up to another 3% on market without making a bid, but liquidity is very tight and any big buying would make the price rocket. In RG’s position I would stay out of the market, negotiate with the big holders, and then mount a second bid at a sensible price. He is allowed to do nothing: he could sit on 88% forever, but there have been many posts about this and the general feeling was that that is very unlikely.

This is a long game-it may take another 12 -24 months to resolve, but I think there is low risk holding shares at around 80c. The price may sag a bit, but there are clearly other shareholders who are happy to buy. I can only say again “BE PATIENT”; it’s likely that nothing will happen before 31 December, and I expect that the shares will stay in a narrow range on low turnover. For myself, I’m still buying at this price and fully understand that I may not get out for up to two years. I’m willing to take that risk. It’s possible but I think very unlikely that RG will try to wear out the minorities by doing nothing for many years: I doubt it for several reasons, but who knows how vindictive he wants to be? Bear in mind that PGH may not pay dividends from now. There were also many posts on whether and when RG can apply to delist PGH. In short, not before June 2025, and even then it’s unlikely. There are still 400 holders with >5,000 shares.

DYOR. Not advice- just my own opinions about my own PGH shares.

16/08/24 11:58 Post #: 75236788

Underlying FY24 NPAT was flat at$44.9m. On FY24 average shareholders funds of $441m that is a return on equityof 10%: not bad but could be better. Underlying eps [my calculation] were flat at 13.0c forboth years. The 84c takeover price equates to a PE of 6.5x the underlying eps, which is very low. Thesenumbers vindicate the view of minority holders that a fair price would have beenabove $1.20.

31/07/24 10:39 Post #: 74998538

Agreed. So will I. I have bought 125K, mostly after bid expired. Happy to buy more. I again urge shareholders not to worry about potential delisting: at a minimum that is a year way, even if the ASX agrees to permit it, which is fairly unlikely. Just focus on what the business is doing. Also as William says the court case is set down for April 2025: it will be very interesting to see if RG lets this trial proceed in the public spotlight or tries to settle beforehand. BE PATIENT. Not advice DYOR

23/06/24 11:37 Post #: 74444764 HeadingSorry this isa long post but the PGH end game is subject to..........