Helikon have had a big CFD position in ADT. Funds generally like...

Helikon have had a big CFD position in ADT.

Funds generally like that because :

Zero stamp duty in the UK.

Leverage (initial margin only ~15 %).

Easy to grow or shrink without moving the share register- until you need votes.

On July 2, Helikon unwound 20.9 million of its swap exposure at A$5.75 (the Form 8.3 shows a decreasing long CFD for exactly that number).

Simultaneously it bought 20.9 million real CDIs on-market at the same prices (three large prints totalling 21.56m) from it's CFD broker which held them for hedging.

Net result in the Form 8.3hysical shares up to 46.2 m (13.4% voting power).CFDs down to 48.6 m (14.0% synthetic).Total economic exposure roughly unchanged at 94.8 m shares (27.4%).

Helikon can't go above 30% without having to do an instant all-cash takeover themselves.

Now note that while Helikon's economic interest is 27.4%, its voting interest is only 13.4%.
Only the 13.4 % registered shares can vote.

The other 14% are CFDs which can't vote.

In order to vote those, they would have to convert the CFDs to shares which will cost real money because the CFDs are leveraged (typically 15% margin).. while Helikon has 1.3b FUM, they would have to find over $230 million to swap out for shares (14% * $2b AUD * .85)

Unless Helikon has a side letter giving it legal power to direct the brokers (in which case those positions would already have been disclosed as voting rights under FCA DTR 5), the Panel and the Court treat them as non-voting.

To do so is not only costly but also does not materially change the arithmetic a counter-bidder must meet.

Consequently Dundee can count on about 18% hard “yes” votes (Helikon’s 13% plus Paul Cronin/Dwellstone’s 5%), not the 27 % economic figure sometimes quoted.

A counterbidder is still very possible. They would need to:
1) Kill the scheme (needs ≥ 25% of votes cast to block the 75% test)

They would do this by
* Securing L1 Capital’s 16.8% (its soft undertaking falls away automatically once a firm higher bid is announced).
* Add ~10 % from the free float – e.g., T. Rowe’s 4.8% plus a slice of the arb stock parked at BNP/Citi/GS or one index fund.
Total cash outlay before launch: buy a 5–7% toe-hold for credibility; proxies cost nothing.

That combination gets to the 25% of votes cast required to block the scheme, regardless of whether Helikon stops at 13% voting or pushes higher.

2) Announce an all-cash Rule 2.7 bid above Dundee by early August (Court-meeting proxy cut-off w/c 18 Aug estimated), I think practically by Aug 12 a counterbidder would have to appear.
Count on L1 and arbitrage funds to tender; once >50% acceptances are in, declare unconditional and squeeze-out the rest.