For an explanation, see Regulatory Guide 101 issued by ASIC in...

For an explanation, see Regulatory Guide 101 issued by ASIC in December 2007 - http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/rg101.pdf/$file/rg101.pdf

This states that buybacks are supposed to be staged only where better alternative forms of passing surplus cash back to the shareholders do not exist (101.44).

The best way for PPN to pass cash to shareholders would be by instituting a regular dividend. According to their latest annual report, they earn better than 1c per share, so a 50% dividend payout ratio would see them returning a half-cent dividend to shareholders which equates to a 4.5% yield at current market prices. What's more, they have franking credits building up because they are making money and paying tax, so I don't think they have any valid reason not to pay a dividend. Maybe they just don't want to. Now, why would a company take that approach?

Under 101.56 and 101.57, if a buyback is announced and no shares are bought inside of two months from the start date, the buyback notice is considered to have expired.

As the buyback start date was 15 September, the initiative lapsed on 15 November because no shares had been bought back. John Trimble could therefore be viewed as having misled the AGM on 20 November when he said that there was a buyback in place which had not been activated. According to the ASIC guidance, the offer lapsed 5 days before he spoke.

Is the company serious about a buyback? Who knows.

If they do intend buying back shares, they need to be in the market every day, buying the shares which are out there now. That would soon sort out who is serious about buying and selling.

Guidance 101 refers to the 10/12 rule in which the company can, without going to the shareholders, start buying back up to 10% of the issued shares over a 12-month period.

This is not an absolute limit because the company can then buy back another 10% in a following 12-month period if it gives a fresh notice, again without troubling the shareholders for permission.

If the company wants to buy back more than 10% in a 12-month period, it has to go to the shareholders for permission. This permission would be given because Trimble holds 76% of the vote.

Now here's the neat bit. If a company buys back shares and cancels them, all the remaining shareholders see their percentage shareholding rise proportionally. How many shares would the company need to buy back and cancel in order for Trimble's shareholding to reach 90%? The maths is simple - it's about 5.5m of the 8.3m shares which Trimble does not own. This is more than the 10/12 targeted 3.4m shares but, as the rules indicate, this can be overcome.

PPN can't start buying back without issuing a new buyback notice and giving the market appropriate notice before commencing, as required under guidance 101.

About 80% of PPN shareholders hold less than a marketable portion of shares. The company would be smart to target those holdings first by a compulsory acquisition process and clean up the shareholder base before moving on to try buying back any larger amounts.