talk of $3.50

.. but will it eventuate.

It's a lame duck now.

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Brockman holdouts in takeover talks with Wah Nam

by: Sarah-Jane Tasker
From:The Australian
November 11, 201112:00AM

HONG Kong's Wah Nam is in talks with Brockman Resources' remaining investors about taking full control of the company, in a deal that could offer cash to executives who declined to accept the original scrip bid.

Wah Nam had secured a 55 per cent stake in the Perth-based junior through its bid, launched last November, which offered investors 30 Wah Nam shares for each Brockman share.

Brockman's board strongly opposed the bid from the outset, saying it undervalued the company, and raised with the Takeovers Panel allegations of questionable trading behaviour by offshore investors associated with Wah Nam. These allegations were dismissed.

In an unrelated matter, Wah Nam announced last month that its chairman, Peter Luk, who also took on the role of chairman at Brockman, was assisting Hong Kong's Independent Commission Against Corruption in an investigation. Wah Nam said the investigation related to a matter that took place before his appointment to the investment vehicle's board.

Brockman, which is hoping to develop the Marillana project in Western Australia's Pilbara region, revealed this week, in response to a speeding ticket by the Australian Securities & Investments Commission, that there had been preliminary and confidential discussions with Wah Nam about ownership of the company.

"These discussions remain at a very preliminary stage and there is no guarantee that they will result in a transaction," the company said in the statement.

Talks to take full ownership of the company would be with deputy chairman Ross Norgard, who has a 9.3 per cent stake; former managing director Wayne Richards, who has 2.07 per cent; and chief executive Colin Paterson, who has a 2 per cent stake.

It is understood that any deal to get them to sell out of the company would need to be a cash offer.

Analysts said institutions had left the stock because it was unclear who was behind Wah Nam and its intentions for the project, adding that it made sense for the company, which last year derived most of its earnings from a limousine business, to move on the shares it did not own.

Brockman shares closed at $2.19 yesterday, but one market observer said there was a real opportunity for a cash bid of about $3.50 a share.

"If it is a state-owned enterprise behind the company it could have the funds to make a cash bid and have the ability to fund the project development," one analyst said.

"There is an opportunity here for a bid to buy a good asset at a deep discount."

Wah Nam noted Brockman's statement, adding that it was "very preliminary".

It said there was no assurance the talks would result in a transaction.