Hi BenRe your last point: I’m overseas and don’t have time to...

Hi Ben

Re your last point: I’m overseas and don’t have time to check the relevant law thoroughly, but I think the simple answer is “NO”.

First of all, RG must wait 6 months after the bid expires before buying any more shares. Then, it’s important to note that the 3%/six months creep rule (law) permits him to buy shares UP TO that amount, but of course it depends on people wanting to sell. If no one wants to sell, he won’t be able to buy any shares even though the law would permit him to buy up to 3% each 6 months.

Remember also that is just a glacial process of buying- if some people refuse to sell, RG could keep buying tiny amounts for 10 years and he still wouldn’t reach 100%. The important point is whether in the future he can meet the conditions to be able to use the compulsory acquisition power. It is very clear from RG’s statements about the current bid that he is very keen to use the CA power now, if possible.

As I mentioned before, having 100% rather than 99.9% does have commercial consequences for RG. It’s not just about being able to “control” the business. These include being able to consolidate tax positions of his group cos including PGH, renegotiating debt agreements (probably more cheaply) and generally to move cash around to an extent that he can’t do with minority holders. He is clearly very keen to use CA: the question is-having so far failed to meet the 90% threshold in the current bid- by being too mean- is he willing to bid again at a price high enough to dislodge enough of the standouts, in particular Manipur, under a second bid where the hurdles will be tougher?

As I said before, my understanding is that he must satisfy TWO conditions to use CA: more than 90% but also get over 75% of the shares he doesn’t own at the start of a second bid. That might mean that he couldn’t activate the CA power in BID 2 until reaching about 97%. If he doesn’t reach 90% in BID 1 before it eventually expires, he is going to have to offer a price attractive to nearly all the holdouts-especially Manipur- to have any chance of using CA in BID 2. However, that higher price would only be paid for the last 12%: it wouldn’t reopen the first BID. As I and others have said, the holdouts have about 41m shares. If that number still applies when BID 1 expires, and he could get the holdouts over the line by offering another 50c, it would only cost him another $20m approx. For the benefits he would gain, that is a tiny cost. Unless he has a sudden surge of off-market acceptances, it looks likely he won’t reach 90% even if he extends BID 1 to September. Thus- I hope-he will have to bite the bullet and rebid, and that would mean offering a price that Manipur, Username and a few other large holders find persuasive. I understand that Manipur and RG have court action set down for?? July about the earn out price of a business sale. I assume that M will press for a hard bargain there, and RG will be alarmed at the thought that Manipur will probably then have him over a barrel re the share price—unless he gets to 90% earlier than that hearing.

In summary- doesn’t worry about the 3% creep: I think it’s a nonissue in this contest. CA is the main issue, even more so than the delisting threat (which is likely to be a hollow threat anyway).

Not advice. DYOR