Story from The Age, interesting read, I think these blokes just...

Story from The Age, interesting read, I think these blokes just won't to get their hands on IDG's $17 million that is sitting in the bank....


GoldLink stretches family ties
Ian McIlwraith
February 20, 2009
Shareholder meetings have multiplied to try to untangle Bell IXL's bid for control.

INVESTORS in GoldLink Income Plus have possibly seen one another more times than members of their own families over the past year.

This week they were summoned to their sixth meeting in 12 months — and they also had an annual gathering in December.

It has been a little like one of those unpleasant squabbles between relatives who think their share of a deceased relative's estate ought to be somewhat larger.

Lancelot has never understood why these disputes occur, having gone around to all who might potentially be of benefit to the Lancelot Super Fund when they pass on, and obtained notarised statements in his favour.

Sadly, some others are less forward-thinking, which is why since 2007, when GoldLink passed on in sharemarket terms, its "family" of shareholders have been fighting over the estate.

For those who missed it, GoldLink got its gold hedge fund strategy so spectacularly wrong it lost $130 million, but still had almost $30 million in remaining cash — akin to leaving a honeypot near an ant's nest.

Late that year, the irrepressible Massimo Cellante and his Doncaster-based Bell IXL investment vehicle had their first crack at taking control of GoldLink, but were rejected.

That led to the first shareholder gathering last April, when not only was Bell IXL trying to get a directorial grip, but Perth's Tim Kestell and Peter Pynes, through a vehicle now known as Emerald Capital, also made a dash for the cash.

Shareholders of GoldLink got to meet again in June, August, November and December as the opposing forces arm-wrestled.

Cellante made it onto the board, but never had enough stock to control GoldLink, allowing the Emerald team to mount a proportional takeover of the company and, eventually, come up trumps.

Along the way Cellante became a corporate Ernest Rutherford, splitting his 22.9 million GoldLink shares into 1912 separate holdings, via trusts, to try to exploit a perceived loophole in the takeover laws.

Proportional takeovers are where a bidder offers to buy a specific percentage of each investor's holding — in this case Emerald offered to take 45 per cent of everyone's else's shares. To protect small investors, proportional bidders have to buy all your shares if you would be left with a holding worth less than the Australian Securities Exchange's $500 minimum for a marketable parcel.

Cellante not only decided to exploit that by slicing and dicing his stake, the Target's Statement the GoldLink board sent to all other investors suggested they consider share-splitting, so that instead of selling just 45 per cent of their stock, they could sell 100 per cent to Emerald.

Some canny investors, including some subscribers to the Rivkin Report, apparently picked up on the idea.

The Australian Securities and Investments Commission has previously given proportional bidders a waiver, allowing them to treat any accepting shareholders with similar names and addresses as a single holder — thereby disallowing share-splitting.

GoldLink claims it raised these issues with Emerald before the paperwork went out, but pressed ahead without the ASIC waiver.

Emerald was suddenly faced with the possibility that it could end up getting all of GoldLink, for more than $25 million if every shareholder decided to split their holding. That would see it not only having paid more for GoldLink than its assets, and way more than Emerald's funding, but possibly losing the value of its target's stock exchange listing.

Emerald complained to the Takeovers Panel, which last month said Bell IXL's arrangement was "against the basic principles and policies" of takeover rules and issued a declaration of unacceptable circumstances. It also rejected an appeal, which meant Bell has had to retain a 9.9 per cent stake in GoldLink.

Now Emerald has sent back to GoldLink more than 600,000 shares from other investors who accepted, on the grounds that it believes they were share-splitting too.

GoldLink has refused to re-register those shares in the names of the original holders, arguing that the contractual arrangement was between Emerald and the shareholder, and not with the company — and that directors might be breaking the law if they did so.

It would also seem to present share registry Computershare with something of a logistical nightmare to, as m'learned friends say, unscramble the omelet.

Additionally, Cellante and the other GoldLink directors, Mark Smith and David Franklyn, have backed away from their original agreement to step down from the board once Emerald won control. That has forced Kestell and Pynes to push ahead with a shareholders' meeting next month to depose them.

Lancelot can see that investors being told to take back their shares and return the money to Emerald might be a tad unhappy. The original offer was 25¢ a share, cut back to 7¢ for those who accepted after the cut-off date for GoldLink's 18¢-a-share capital return.

With the stock trading at less than 2¢, though the residual cash backing is close to 4¢, those investors who thought they had got out with a win will no doubt be seeing their lawyers — which is what GoldLink has recommended they do.

Emerald's team had best hope that once they are in the driver's seat and start deploying the $5 million-plus still in GoldLink's bank accounts, that they get their investment calls right.