RHK (ASX) The treatment for your nerve pain...

Originally posted by Bigunks ↑

Trav, I think you are optimistic hoping a large conglomerate will take OCJ and the balance of minor S/H out. At the current market cap, that is $117.6M and who would want to spend that and have no control? Having acted the way they did in getting to 53.4% I don't see Todd giving away control as I believe they need FMS for BBIG to work. The way I see it is that Todd has two options:-

1. Go into production, just like Twiggy has done with his 33.3% holding of FMG and a heap of minor shareholders. Then the market will decide the fair price of a share.

2. Acquire 100% of FMS in which case they will have to pay for it. The problem here is we don't know at what price. Todd no doubt will want to pay as little as possible. OCJ no doubt have a price at which they will want out but the only one/'s that know this is OCJ and possibly Todd. Also who knows at what price 60% of the minority holders will want out because if this happens then the other 40% will have no choice.

I've seen a SP's of anywhere up to $8.00 being quoted on this forum. These people are delusional. FMG's SP is $6.63. They currently have 2.76B shares on issue against 3.19B for FMS. Their resources are 11.63BT of Hermatite and 6.7BT of Magnatite against FMS's 1.0BT of Hermatite. I know FMS still have more drilling to do but I gather so do FMG. So ignoring the difficult Magnatite, based on current Hermatite resource and shares on issue the comparable SP of FMS is $0.493

But resource means nothing if you can't get it to market at a profit. From FMG's website - " The company is now producing 165 million tonnes of iron ore per annum and is focused on being the safest, lowest cost,
most profitable iron ore producer". Using BBIG will FMS be able to be the lowest cost and most profitable producer, I think not. But if we assume FMS can, and on 25MT pa production, then an equivalent comparable SP is then $0.87 or $1.74 if production is cranked up to 50MTpa.

There is no way Todd will be paying $0.87 per share or anywhere near this. They possibly know that they are unlikely to ever get to a 90% holding. They know that minority holders will be very vocal should they try to be underhanded towards us. So what are their choices? My guess is to make one more offer to try and take out OCJ and a few others, then make money from FMS and BBIG. Or complete their strategic review an say PIOP is uneconomical at forecast IO prices of $US50 and then make another low ball offer sometime in the future. Can't see the latter happening as Todd have too much invested in Rutila, BBIG and FMS to walk away and the longer they wait the longer it is before they start making a return.

Unfortunately I am not a large holder but my holdings are free carried. I just feel there is too much emotion about FMS and holders need to be pragmatic and do the best for themselves.

PS Not a dig at you Trav, just my general thoughts. Will wait to be shot down.

Expand

You are absolutely correct unless a group of minority shareholders take the initiative and can't see that happening.

Chances of option 1 happening is low as that isn't in the Todd DNA as their own history shows and others have stated it including TIO employees apparently.

Chances of option 2 are high and it will be a bloody affair unless non-TIO shareholders take the initiative and put to TIO a proposal on their own terms. No matter how much crying to the media is done it may well end in a soggy mess and as a Hayden Bairstow from Macquarie observed back in 2015 "the company's fortunes now rest with Todd Corporation".

So its looks like its going to be a trade it for as much as possible as often as possible to either maximise profit or reduce loss and don't be left holding the bag in late February when TIO can launch a new take-over offer.

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(20min delay)
Last 84.0¢		Change -0.020(2.33%)		Mkt cap ! $171.8M

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84.0¢	84.0¢	84.0¢	$971	1.156K

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