K2H - KIDSTON/CRAVEN Board of Directors and GOLDMAN SACHS - CONFLICTS concerning INTERESTS and OBLIGATIONS.
On 17 August 2022 the then Board received a revised NBIO, (25 cents), from Farquhar/Jackson, (Skip Capital):-
https://app.sharelinktechnologies.com/announcement/asx/e84015d123b40b39f6e2418993eef4c1
Media was subsequently back grounded by an inside party or parties with information which led to speculation that funding was in place and the then Board would be in a position to proceed with a recommendation for acceptance of the offer. This led to a, 23 September 2022 ASX Announcement;-
https://app.sharelinktechnologies.com/announcement/asx/b65d8530f723481082fc77007b5014b7
By the time of the 25 cent offer the Genex Power Ltd Board, Skip Capital, Skip Capitals Capital’s legal advisers,the Northern Australia Infrastructure Facility (NAIF), the ministers responsible for the Northern Australia Infrastructure Facility Act 2016, King and Gallagher, and various others, including th Attorney-General were aware that the takeover offer by the two individuals, Jackson/Farquhar, was legally flawed and challenged.
On 23 December an ASX announcement was made:-
https://app.sharelinktechnologies.com/announcement/asx/e84015d123b40b39f6e2418993eef4c1
It is noteworthy that the announcement did not say why the offer from Farquhar/Jackson was withdrawn. No mention was made by the Board or Mr Simon Kidston, who had long since taken up a spokesperson role for Genex, of the legal issues that had been raised with his board and numerous others, including the Chairperson of NAIF. However it was put about in the press, that the egress of water into the Main Access Tunnel was the reason for the withdrawal.
It is noteworthy what the Board said in the 23 December,2022, ASX Announcement:-
“The Board maintains its belief that Genex has compelling future prospects as the energy transition gathers pace and the Company remains focused on the continued delivery of the 250MW Kidston Pumped Storage Hydro Project and the 50MW Bouldercombe Battery Project, alongside its attractive pipeline of growth opportunities.”
On 12 December 2023 an ASX Announcement was issued. It gave an update of the many engineering advances made since the withdrawal of Skip Capita:-
https://app.sharelinktechnologies.com/announcement/asx/7459d4779ae6b479594904dfb37f314d
This announcement was made on the same day, 12 December 2023, that the Boulderscome Battery became fully operational.
Four months on from that date, 12 December 2023, the Kidston/Craven Board has not provided any financial information about the Boulderscome Battery and, FAR MORE SIGNIFICANTLY, it has not provided the ASX or GNX shareholders with financial information about the likely financial implications for Genex Power Ltd of the ENERGIZATION of K2H, the 250MW Kidston Pumped Storage Hydro Project, later this year.
Goldman Sachs was engaged by Genex when the Skip Capital bid was made; in other words nearly two years ago. Goldman Sachs is, right now, very aware of all aspects of the many developments during those two years. Developments which have resulted in substantial DE-RISKING of K2H and the very substantial addition to SHAREHOLDER VALUE.
Goldman Sachs must be well aware, from the time of their Skip Capital engagement to now, that the Kidston/Craven Board supports the liquidation of Genex Power Ltd.
On the other hand Goldman Sachs is also well aware of the obligations the “Kidston Independent Committee” has to act in the interests of all GNX shareholders.
For Goldman Sachs to professionally perform its recent and likely present tasks it must have detailed information of the financial consequence of the ENERGIZATION of K2H. Goldman Sachs is fully aware that the Kidston/Craven Board has not provided the ASX and GNX shareholders with such information.
Goldman Sachs is also aware that financial information about the Boulderscome Battery has also been withheld. Likewise Kiidston/Craven Board has failed to provide information about the CURRENT STATUS of the Kidston Solar Stage 2 Project.
These important pieces of information are vital, in fact essential, for Goldman Sachs to prepare a comprehensive report for inclusion in the TARGET STATEMENT from the Kidston Independent Committee.
K2H, in its own right, as an important distributed energy storage facility, has very substantial value. K2H also adds value to the existing Kidston Solar Stage 1 and will certainly make the operations of the future Kidston Solar Stage 2 and Kidston Wind project more financially rewarding.
For Goldman Sachs to prepare a professional report it is imperative that they have all the details of the NAIF concessional loan, (rumored to be less than 3 percent over fifteen (15) years. Information which J - Power, through its director on the Genex Power Ltd Board has, but which has been withheld from the ASX and GNX shareholders by the Kidston/Craven Board.
The above paints a picture of potential and probably real conflicts for Goldman Sachs and Genex Power Ltd. Goldman Sachs and Genex Power Ltd have different obligations to different parties. It may be perceived that Goldman Sachs is investigating and reporting on behalf of two parties: ONE, all the GNX shareholders and TWO, the persons on the Kidston Independent Committee whose interests have been perceived to differ from those of many GNX shareholders.
Goldman Sachs, which has not made any statement about the “experts” they are employing to determine the SHAREHOLDER VALUE of Genex Power Ltd has reasons, going back to July 2022, to believe, as many GNX shareholders are inclined to believe, Dr Craven and Mr Kidston are disposed towards selling their shareholdings. A matter which will not have escaped the attention of J - Power.
Goldman Sachs must be very conscious of the fact that the J - Power offer is only 2 cents more than that offered by Skip Capital; an offer keenly supported by the ten Genex Board. This is despite the 23 December 2022 statement, which I repeat:-
“The Board maintains its belief that Genex has compelling future prospects as the energy transition gathers pace and the Company remains focused on the continued delivery of the 250MW Kidston Pumped Storage Hydro Project and the 50MW Bouldercombe Battery Project, alongside its attractive pipeline of growth opportunities.”
This statement and all the work completed since August 2022 seems to be in stark contrast to the apparent willingness by the Kidston Independent Committee to largely ignore increased SHAREHOLDER VALUE over that period.
It seems the Kidston Independent Committee consider, from their perspective, the 27 cent offer as fair and reasonable. They have conveyed this impression knowing that they are party to the withholding of important information, particularly concerning K2H and the NAIF concessional loan.
It seems reasonable to assume Goldman Sachs completed this conflicting task by 30 March.
The two extensions of the Exclusivity Period under the Confidentiality and Exclusivity Deed may suggest that Goldman Sachs cannot find financial evidence to support/justify the apparent discounting of the K2H; K2H in its own right and as a financially significant adjunct to Kidston Solar Stage 1 and the future Kidston Wind and Kidston Solar Stage 2.
A reasonable observation seems to be that J - Power knows full well, from inside, (Director), information, and subsequent due diligence, the 27 cent offer is substantially below a fair market price.
The Target Statement from Genex Power Ltd may make for interesting reading if it supports the 27 cent offer from J - Power.
Goldman Sachs will have to have argued that the SHAREHOLDER VALUE of GNX shares has, since August 2022, gained little more than inflation; despite the expenditure of hundreds of millions of dollars of concessional taxpayer provided funds from NAIF.
