Hi BlurrtLike DocWood says, we don't have a clue about BEL's or...

Hi Blurrt

Like DocWood says, we don't have a clue about BEL's or any other SHs strategy but experience dictates that we must keep our wits about us.

I think the failure at A#1, following the other disappointments MEO have had, but with a positive bank balance, left MEO vulnerable.

After A#1 there was a flood to the exit door by a large number of shareholders. A number of those remaining were locked in at a loss which would have left MEO vulnerable in the eyes of a corporate raider.

Leading up to A#1 we talked about the fact that MEO should be careful of not being a one trick pony (Artemis) and should have more projects lined up in case of another duster. In their business plan MEO talked of new ventures, new permits and the Heron farmout, but nothing was forthcoming pre and post A#1 apart from AC/P50 and AC/P51. The Ashmore permits did not have enough weight behind them to support the SP after A#1. Quite a number of LT holders can see a future in NT/P68/Tassie Shoal but that is a LT project and, unfortunately, does not sustain the SP in the ST.

One saving grace was the CR which elevated the cash backing to 19c which gave us a cushion for the SP fall. At the same time, when the SP fell to those levels, the cheap entry point would have stirred the interest of investment companies.

If the SP had gone down to 15c, say, then the company's 100m cash NTA alone could have been purchased for 79m.

I know it is not as simple as just buying the shares on market but if a major holder senses that there are grumblings amongst the SH ranks then they can start to build up their voting power through share purchase. This can be just through on-market purchase and can be for a single entity through various accounts/businesses.

Alternatively, like IDG, it could start with a proportional T/O, by offering SHs, say, a 75% premium in cash, shares or a combination of both, it may have been attractive to some long suffering MEO SHs. Also traders who entered at lower levels would also look favourably at a 75% profit.

If there is a weak conditional clause(s) put into the proportional purchase (as it was in IDG) then this could be exercised, but not until the purchasers have increased their holdings/voting power. Like I said before, MEO voters can now vote on proportional T/Os so this would put SHs fate in their own hands.

This is the way to supremacy in a company, increased shareholding leading to voting power.

The next move is to put a person on the board or replace the board altogether. If the original board has not been performing then the SHs would probably back the move. With IDG the board was replaced by notable people in the mining industry but they did not last as, when the coup was completed, they were replaced the new board with the original T/O personnel only interested in stripping the company.

The next move is to sell or spin off the assets and put the money in the bank. In the meantime the new board are given options on top of the shares held through trusts or companies they have accumulated. A SPP may be offered and any shortfalls could also be snapped up by the board to, again, increase their holdings.

The next move is a share consolidation, IDG was 1:10. This confuses the issue more as the shares worth .45c are now worth $4.50. The SHs own less shares now but with the same value of course. Those with small packages are offered/required to relinquish their shares, at a price of course, and these are cancelled.

Now that the T/O consortium have their shares and the assets have been sold off, the next phase of the coup is a share buy back plan. This is attractive to LT holders as they think the NTA of their shares will appreciate. This is true but it is also true for the major SHs whose %ge holdings (and voting power) increases by just sitting there. Also, if $3.50 (formerly 35c) options have been given with limited vesting conditions, they can be consigned, offloaded at the current SP (up to $6.70) for a nice profit and cancelled through the buyback.

The final nail in the coffin is when the board requests to be delisted as a public company through lack of assets (which they sold off in the first place). This leaves LT SHS with the choice of staying in a cash box company without the ASX rules and a board who have shown that they have no concern for SH interests. So even more SHs sell their holdings leaving the T/O board holding the majority of the cash assets to do with what they will. Once delisted there is no requirement for the board to gain SH approval for any further transactions. Usually notifications are in an annual newsletter.

This is all perfectly legal if they act within the corporation rules and there are enough SHs willing to vote out the original board and give their shares over to either the proportional T/O or the share buyback.

Such plays can go on for quite some time. It is two years since BIV made the play for IDG but perseverance is paying off for them. The unfortunate thing for the LT IDG Shs is that the SP never reached the original proportional T/O offered two years ago.

This is different to a T/O by a similar company with similar ideals to the LT holder.

For LT investors who originally invested in a relatively strong company, the rug is pulled from under them and they have to either sell or be left without protection in a company that does not resemble their original purchase.

Of course this does not affect ST holders who don't usually bother about complete fundamentals but rather trade the swings or ASX notices.

The same is happening with BEL where the Khan family are trying to take control of the company but have not followed the rules, so ASIC are now involved. I feel the rules should be tightened to give ASIC more of a bite when such glaring loopholes are evident.

With any publicly listed company the management cannot control the SP. All they can do is run the company as best they can. They need to have a sound business plan with realistic goals, employ capable staff to pursue those goals, be fiscally sound to maintain shareholder value and last, but not least, be transparent and communicate with the SHs.

At the moment MEO ticks all those boxes, IMO. Communication is not a strong point but it is a bit difficult when dealing with larger companies who tend to have the last word (ref. PBR's response to the A#1 results and the ENI farmout}. It does not pay for an emerging company to tread on the toes of those they wish to do business with and pay the bills.

CR decisions can also be looked at as negative by ST traders, who don't see the complete picture, but when the health of the company is at stake, then these decisions need to be made.

The fact that junior explorers are the ones who pursue wildcat wells also tests the mettle of all those involved thus adding to the risks of investing in such companies. Failure can test a company in more ways than one.

This is why a cashed up company with a large retail SH content can be open to attack.

The only barrier such companies can put in place is to have sound work ethics and keep the company moving forward.

All that SHs like us, can do is research our investment fully and communicate with each other which is why HC is such a good meeting place for principled investors.

As far as BEL are concerned; like I said in my earlier post it appears they see a future in MEO but if they see the company faltering that may change and who knows what they will do.

All we can do is monitor the situation by being vigilant but, very often, the individual SHs can do little - similar to a bot attack.

But without LT Shs, public companies would not exist.

I am sure there are plenty of ways to decimate a company but it is a part of life in the public company's domain. All we can rely on is a regulatory body with their eyes open.

Let's hope MEO keeps the positive announcements coming so we get a SH base who are interested in the company's vision and we don't have to worry about those who may have ulterior motives.

The farmin by ENI was the start of the road to recovery.

IMHO.

#:>}}

PS - I think we always were on the same page DocWood.