You're right, management competency is not an issue but the board's performance over this deal has certainly put a spotlight on it. I was always happy to sit back and read the posts of Bungy and co after their dollar parties and hear that they met some of the management and it was full steam ahead. This deal has shown that in many cases we have all been duped.
Example 1 is the fact that we all know that the rule of thumb is that first bid in a takeover is not the last, yet our board entered into this deal having given BHP the right - not opportunity - the right to match any other bid. Whose interest does that serve? BHP - yes. The recipients of paid out options (i.e. the board) - yes. Shareholders - NO. That's the big one for me and there have been many more documented.
This bid has been set up so that the only way that we can get another bid for UMC is if this one is rejected by shareholders. That may cause short term problems, it may not. If it is rejected I think - just like the old adage says - the first bid will no longer be the last and the starting point will be somewhat higher than $1.30. I have been happy with the instos interest in this because them playing hard ball is the only way this will go above the $1.30. This is not about losing UMC so much as losing it for a pathetic price.
If it is rejected UMC will be seen as an asset BHP desires but an asset that will now cost more - and will open that asset up to other bidders. And opened up with 3rd party rail a real possibility and an IO market that all analysts are spruiking as being as healthy - if not moreso - as ever.
Just a few minutes ago I received another call from UMC about my voting intentions. The man on the phone said that I need to ensure that I cross the box at the bottom of the page. OK I said. On inspection, that box allows my proxy to vote any way he/she likes no matter my instruction - even if I have already directed my proxy how to vote. That is bald-faced deceit and when I pointed that out I was told he was only acting under instructions from the company.
There is no end of dodgy business going on with this deal and no end of strange behaviour from a board that is supposed to be looking after shareholders' interests.
And Westcott, if a new board got to the point that it needed to do anything other than drive a harder bargain to sell the company, then an announcement on those detritals that you so rightly queried as well as a more positive spin on the drill results we have so far would IMO not be a difficult thing to do.
Like I said, still more twists to come IMO. I will be watching and holding with continued interest.
Good luck to all and DYOR
UMC Price at posting:
$1.29 Sentiment: Buy Disclosure: Held
