Substantial Shareholder Notices???

Recent posts on Hotcopper probably are no doubt typical of what most smaller investors are thinking but we may soon get an indication of what our two largest shareholders are thinking.

Stock will soon be allotted under Tranche 1 of the (most) recent capital raising. If our two largest shareholders haven't taken up any shares in the Tranche 1 offer, nor bought any recently on market, their holdings will each drop from about 12.7% to 11% and from about 9.2% to 7.9% respectively. This will result in each of them having to lodge a Substantial Shareholder Notice in the very near term.

If we don't see such a Notice, my rough calculations suggest we can conclude that the Smorgon holding has increased by a minimum of about 21m shares (which would give them a new holding of about 11.7%) and the Franklin holding has increased by a minimum of about 7m shares (which would give them a new holding of about 8.2%) of enlarged number of RED shares on issue. These numbers would be the minimum extra shares they would have to buy to avoid having to lodge a new Substantial Shareholder Notice. I, for one, will be fascinated to see what transpires.

One extra thought regarding the possibility of RED being taken over at today's "bargain" price. If Smorgon's retain a 10%+ holding, that's a clear signal to any potential predator that Smorgon's could easily thwart a full takeover and deny a predator to chance to use the Takeover Provisions to mop up non accepting shareholders. A predator has to get to 90% before it can use this provision.

If Smorgon's continue to stick around a bit longer at or near their current level of holding, and if there's going to be a takeover bid, it'll be at a price acceptable to Smorgons. As I said, I'll be fascinated to see if any Substantial Shareholder Notices are lodged in the near term