SANTOS may have offered a 50 per cent premium to win a friendly deal from quarry ESG, but a rump of retail holders in the NSW coal-seam gas developer aren't happy campers.
The core objection -- surprise, surprise -- is that 20.9 per cent holder Santos isn't offering nearly enough for ESG's upside.
"I'm a significant retail holder and I can tell you there is almost 100 per cent discontent with others like me on this ridiculous deal," one holder told Criterion.
The investor notes that Santos has struck ahead of scheduled reserves upgrades in August, with these announcements reliably revealing big increases.
Another holder takes issue with the "no talk, no shop" clause, which is "designed to shut anyone else out and to stop shareholders getting the information they need to make an educated decision at the general meeting". We can understand investors investors might feel short-changed. But they also have to bear in mind sentiment towards the coal-seam gas sector has waned, with ESG facing myriad challenges developing its Narrabri project, including stiffening community dissension and the need to find $3 billion.
But democracy will prevail. ESG's register consists of about 13,000 holders, with the top 20 accounting for about 55 per cent.
The scheme of arrangement requires 75 per cent of voting holders by value and 50 per cent by number.
Given that Santos can't vote its stake, retail holders in theory have the ability to block the deal if the resistance resonates with the grassroots.
At this stage we can't be sure. Investors intending to take up Santos scrip should hold
ESG Price at posting:
89.0¢ Sentiment: LT Buy Disclosure: Held
