I don't expect directors to use the share buyback to sell their...

I don't expect directors to use the share buyback to sell their shares although a couple of them may sell a small number of shares to encourage small shareholders into thinking that PEO is in trouble and taking up the offer (if it is in trouble then it surely couldn’t afford to ‘give back’ the proceeds of the sale of the Perth data centre). The share buyback is 'at market' so it looks to be an offer to buy shares at the market price. It means that small shareholders can get rid of their shares at the market price without having to pay brokerage. This is hardly a reason to buy shares in PEO or for the price to rise and it's hardly a generous offer unless you are a small shareholder desperate to get out.

According to my calculations if PEO does buy up 10% of the shares owned by small shareholders the 4 director/major shareholders will then wind up with close to a 75% control of PEO (certainly if you throw in other shareholders likely to be on side with the directors, like employees, this is likely to be the case). That 75% figure is significant because it then allows a takeover, merger or amalgamation with another company e.g. Crazy Johns, using a mechanism termed a 'scheme of arrangement' that only requires 75% approval to go ahead i.e. the small shareholders’ approval would not be needed.

While such a merger or amalgamation would probably be good for the director/major shareholders it wouldn't necessarily be good for the small shareholders if they had no bargaining power. They would be faced with the choice of having a tiny part ownership of a much larger probably private company with no rights, and their money locked up and no easy or convenient way of selling off their stake in the future, or to avoid this, sell off their small shareholdings. Faced with such a choice many small shareholders would probably prefer to sell off their shares but they would be at the mercy of whoever offered to buy their shares and have to more or less accept whatever paltry offer was made. If the small shareholders had some power and could sink a proposed amalgamation they would then be more likely to get a good price for their shares. It’s for this reason that I hope the proposed share buyback isn’t successful and the director/major shareholders don’t get around a 75% control in PEO and make the small shareholders powerless where there is a proposed takeover or amalgamation through a 'scheme of arrangement'. As a small shareholder I won’t be taking up the buyback offer.

Whatever plans are really behind the sale of the Perth data centre and the proposed share buyback if you believe that PEO sold the Perth data centre just so that it could 'give back' money to small shareholders as some sort of act of generosity then you probably still believe in the tooth fairy and the Easter bunny. The Perth data centre, the only part of PEO that was profitable, was probably sold because it was superfluous to future plans e.g. if Crazy Johns wanted to merge PEO into the Crazy Johns company would it want or need a data centre in Perth? Of course it wouldn’t so why not sell it and use the money in the guise of ‘giving’ the proceeds back to small shareholders with the real aim of concentrating enough power in the hands of the major shareholders so they can then do what is good for them while removing small shareholders from the equation?

I don't believe that PEO has ever been run like a true public company but rather to a hidden agenda with the emphasis being to grow the company and keep the share price low (a high share price would make it prohibitively expensive for another company like Crazy Johns to buy PEO out or merge with it so the share price needed to be kept low).

I don't expect the upcoming end of year report to be too flash but once the benefits of linking up with Crazy Johns eventually flow through PEO could become profitable so if there is some hidden agenda such as the one I have speculated about now is a good time for the directors to implement it when the share price is low and the company looks to be doing badly once again treating the small shareholders with contempt under the guise of being 'generous'.