I'd prefer to see RND and TBR merged into one company with a...

I'd prefer to see RND and TBR merged into one company with a portion of the existing cross holdings issued to the market to increase the public float. Just the announcement of this would see the share prices double, and then if done via a book build, NST would be there pushing the price through the roof.

Won't happen and can't see a takeover being successful with the current ownership set-up. However, it would be interesting to see current management forced to justify any rejection of a takeover offer and how they would present/value the IO option.
Done properly it wouldn't be too difficult for NST, as part of their takeover offer, to rip the IO deal to pieces and show it as massively value destructive for existing shareholders....and if the vote on a takeover came down to a vote on the IO deal how would current directors be forced to deal with their conflicts of interest. The 43% shareholding held by TBR would have to be voted for the good of the shareholders and it would be difficult to justify supporting a decision to hand 85%+ of your existing investment to someone else(ie. RCL via the option terms).