I can’t comment on what opinions or preferences the TIC...

I can’t comment on what opinions or preferences the TIC founders may have about a possible takeout price for their PGH shareholdings, or whether they might wish to reach a compromise with RG that covers a settlement of their litigation blended with an offer for their shares. I comment only on the hypothetical points that you and other have raised have raised here

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The Corporations Act (Act) contains several provisions that are relevant to the hypothesis, or variants of it. All of my analysis applies irrespective of whether PGH is listed.

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RG has 88.09% of PGH and the TIC founders have 6.66%. I assume that Mr Harris and Mr Gandur would be regarded as associates under the Act so both are deemed to have a “relevant interest” in the full 6.66% of PGH shares (indeed this is shown by them lodging joint substantial shareholder notices). Even if they were not, I don’t think it would change my analysis below. I see three possible scenarios, under the hypothesis.

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If RG reached an agreement with the TIC founders when he still had less than 90% of PGH (and that would have to be drafted very carefully to avoid breaching the Act) he would only be able to execute it following RG making a takeover offer for ALL the 12% minority holdings. My understanding is that the only relevant exception to this (the second scenario) is item number 7 of s611 of the Act, where the acquisition of the TIC 6.66% had been approved previously by a shareholders’ meeting at which neither RG nor the TIC founders would have been allowed to vote. Such a process would almost certainly have to follow Chapter 2E of the Act (Related Party Transactions) which contains strict rules for the info that must be given to ASIC and shareholders about the deal. It’s very likely that ASIC would demand an independent expert report (IER) (see its Regulatory Guide 111); that would show clearly any value shift between the share value and the compensation target .

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If the s611 (7) exception for the shareholder consent route was not taken by RG, he would have to make a takeover offer for all the shares; in that case s640 applies and the offer would have to be accompanied by an IER. That would obviously blow wide open any attempt to shift value between the shares and a compensation payment. And all shareholders under a bid must receive the same consideration- so a value shift couldn’t be done.

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The third scenario is if RG had above 90.00% when such an agreement was reached with TIC. I believe that he wouldn’t then be required to make a takeover offer to acquire the 6.66% holding but I think Chapter 2E would still apply. What is of most importance in this scenario is that RG might thereby reach say 97% but would not have an automatic right to mop up the last 3% at that price, or indeed at any price. To do so he would have to use the general compulsory acquisition power in s664A, which has some very tough conditions. It would require an IER, could be objected to by any of the minority holders, with the likelihood that the Court would have to adjudicate on the fairness of the matter (with probable input from ASIC)

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In summary I can’t see any way in which RG and TIC could agree to make a compromise and shift value between their compensation target and the purchase of their shares (even if TIC wanted to), in a way that didn’t require the approval of other shareholders, an IER, probably ASIC and the Court if some of the remaining holders were aggrieved

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I don’t know how plausible a tradeoff hypothesis is, or indeed if TIC would have any such wish, but the only way that it might work is for TIC to adjust the amount of compensation that TIC seek re their litigation—but to ensure that the share value part of the deal would have to stand up to independent expert analysis (and perhaps by the court). This might still require legal approvals etc but it would make a value assessment for the compensation a separate matter that didn’t disturb the “true value” of the shares.

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There are many good posts on HC about PGH and how the endgame may go, and I urge shareholders to read them. Of course it would be nice if the so-called independent directors on the PGH Board provided some general comment about all these matters, but given their shameful capitulation to the 84c bid I expect nothing helpful from that quarter. I am not a lawyer and this is not advice. I would welcome a lawyer correcting any errorsI have made. However, my belief is that shareholders shouldn’t worry about losing out in any side deals with the TIC founders (even assuming that those gentlemen have any such wishes). This is all a response to a hypothetical question. I have posted several times about the two different compulsory acquisition powers in the Act and, more recently, that I see no risk of RG and TIC being able to agree a price (irrespective of the compensation point) and then leaving other shoulders in the lurch to accept a lower deal from RG.

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I urge shareholders to focus on the fundamental value of PGH. It made underlying eps of 13c in FY24, so it’s now trading below 6x PE. My belief (not a forecast) is that the trend of future earnings will be upward. The likely delisting is a big nuisance but not a disaster. The fundamental value of the business doesn’t change.