independent experts report

This is just an informational about IERs

From the Shell - AOE Acquisition

Independent Experts Reports
Acquisition Scheme and Demerger Scheme

ASX Announcement 2/6/10

Deloitte Cover Letter Pg 2 (Pg 4 of Announcement)

QUOTE
Section 640 of the Corporations Act 2001 (Cth) (the Corporations Act) (Section 640) requires an independent expert's report in connection with a takeover offer to state whether, in the expert's opinion, the takeover offer is fair and reasonable. ASIC Regulatory Guide 111, which provides guidance in respect of the content of expert reports, notes where a scheme of arrangement has the same effect as a takeover, the form of analysis used by the expert should be substantially the same as for a takeover bid, however, the opinion reached should be whether the proposed scheme is "in the best interests of the members of the company". Accordingly, if an expert were to conclude that a proposal was "fair and reasonable" if it was in the form of a takeover bid, it will also be able to conclude that the proposed scheme is in the best interests of the members of the company. In addition, ASIC Regulatory Guide 111 notes that if the expert were to conclude that the proposal was not fair but reasonable, the expert would also be able to conclude that the scheme is in the best interests of members of the company.

Under ASIC Regulatory Guide 111, a control transaction such as the Acquisition Scheme is:
- fair, when the value of the consideration is equal to or greater than the value of the shares subject to the proposed scheme. The comparison must be made assuming 100% ownership of the target company
- reasonable, if it is fair, or despite not being fair, after considering other significant factors, shareholders should accept the offer under the proposed scheme, in the absence of any higher bids.

To assess whether the Acquisition Scheme is in the best interests of Arrow Shareholders, we have adopted the test of whether the Acquisition Scheme is either fair and reasonable, not fair but reasonable, or neither fair nor reasonable, as set out in ASIC Regulatory Guide 111.
UNQUOTE

If FAIR and REASONABLE = Best interests of the members of the company

IF it is FAIR it must also be deemed REASONABLE

If NOT FAIR but REASONABLE = Best interests of the members of the company

So to NOT be in the Best Interests it must be NOT FAIR and NOT REASONABLE


Now look at the STO Scheme Implementation Deed (Ann 18/7/11) for the Acquisition of ESG

Pg 7
QUOTE
Independent Expert - the independent expert appointed by ESG to express an opinion on whether the Scheme is in the best interests of Scheme Shareholders.
UNQUOTE


The Best Interests Test is dominant but a statement of the Fair - Reasonable duo is to be provided

Pg21 Section 5.9

QUOTE
(c) ESG will instruct the Independent Expert to also express an opinion on whether
the transaction the subject of the Acquisition Resolution is fair and reasonable
to ESG Shareholders (other than Santos, TRU and their Associates).
UNQUOTE

ESG appoints the Independent Expert
Who pays the Expert ?
ESG is in Agreement with STO for the SOA subject to the IER and other conditions

Have there been many IER reports which have concluded NOT FAIR and NOT REASONABLE ?


The Schedule is that the Scheme Booklet complete and provided to ASIC by Monday, 22 August 2011 - including the IER

Remember that Open Briefing by DC of 25/5/11

"Given we expect to have sufficient and meaningful data at 30 June to use as a meaningful basis to interpret the Tintsfield results, a sensible target for a reserves review, subject to certifier availability, would be around August 2011"

AUGUST 2011 - just what has been going on without the Market being informed in the period 1/4/11 to 18/7/11 ?

The AUGUST theme now makes so much sense

Conclusion:

The IER will be like all the others .

Will it include the "will not disappoint" Upgrade or will a Litany of excuses be trotted out explaining how hard it has been to get the water out to let the gas out of the pores in the Tintsfield coals or the Certifier is in Bermuda on holiday or the best for last - "We need more time to be definitive about this Hoskissons seam"


To VOTE NO is about the only conclusion I can make irrespective of the IER report recommendations. It obviously will be better if a WhiteKnight rescues us from the clutches of the Santos.

Not exactly a Saint is the Santos.



Cheers