I'm also trying to figure out various scenario's. I've been tempted to pull the trigger on selling but don't want to cut of my nose to spite my face so to speak. Here's my rough high level take on what could maybe happen and the options available (from my point of view)...
1. Sell pre close expiry of offer
Share price will probably not get to T/O price (my opinion) but might still have a couple of pips in it (on good days). Hedge funds and the like that buy up blocking stakes might be interested but this is a minnow micro cap. The fact that Centaura Capital have taken a 5%+ holding is interesting but could be a double edge sword IMO. Dependant on ones average buy in price will dictate whether selling now is good idea or not (and the oppotunity cost of waiting)
2. Wait and hope?
This has various sub scenario's...
- LG get less than 50% takeup and do nothing else... I think we may still need a CR (as per Target Statement) and therefore we wil get diluted plus we get no real benefit of a major shareholder synergy. Downside is LG will have a major blocking stake so limited chance of another bidder coming in.
- LG improve their offer to improve takeup... This is my favourite dream scenario but as with these things no idea of probability
- An alternative offer emerges from another party... Never rule this out and GFC2 is kinda our friend as gold prices stay strong. We are afterall a producing gold company in the sweet spot of west africa. But their are other coy's available as well (but we do have a very low EV/ounce ratio)
- LG get over 50% and close to 80%... Effective control of the board and therefore control of the operational direction of the company. I think anything over 60% and this will sway shareholders sitting on the fence, but still could take time to get to the 90% compulsory buy.
- LG get to 90% and T/O done... We get access to asian markets for capital (maybe). I believe its a foregone conclusion that we need cash for capital and therefore a raising of some sort. Are LG better placed to raise cash based on their market cap vs SBL going alone?... probably IMO. Big negative is LG have no cash of their own, so one way or another we have to go to the market cap in hand. We do get some diversifaction of geographic risk and access to their modular technology but how much is that worth?
Notwithstanding the potential complexities of holding and trading in SGX shares (however a previous poster has given guidance on how to do it through e-trade which sounds relatively simple - perhaps e-trade should advertise on hotcopper!!,).
We've still got the risk of LG share price and the exchange rate and all the macro risks etc.
I think unfortynaly we are in a tight trading range with SBL and that range is sub 2 for now (albeit smart day traders can still make a monty on each pip)so we may still get some volatility.
None of this may help and but its just me trying to make sense as I try and make my own decision.
Appreciate any comments
Madoc
SBL Price at posting:
1.6¢ Sentiment: None Disclosure: Held
