In my opinion, the basis of the Pass/VIL deal is pretty simple.
Pass want sharemarket exposure for their share of FP. This is not about 10% of Bowtie, the $35,000 cash etc etc.
GGP wanted them but obviously Pass shareholders didn't like the number of GGP shares on issue for the 45% compared to a potential merger with VIL. They have far less shares for a 70%+ exposure.
Deals don't happen overnight and I feel that VIL have executed a proper deal reflecting fair value but surely this deal has played into their hands very fortuitously. Every publicly announced move reflects too strongly that this deal can only concern the potential of FP and Pass' wish for market exposure. They are:
i) Minority holder deciding to buy back in before a flow test.
Think about it. If you are selling a project in which you have the most intimate knowledge to a prospective investor but, after executing the deal STILL only deciding to retain a small percentage. However, even before a flow test, you decide to commit back in through a clause you created for a 'just in case' scenario. Akin to a horse trainer buying a yearling at the sales saying to all and sundry, "we'll aim him at the Melbourne Cup", retain a free carried ten per cent. Low and behold, your horse has gained a start. Then you may have wished to have believed your own b....
ii) Formal approach INTIATED by GGP.
You could argue that the proposed merger would slot in nicely with all the shared ownership of wells, but what about the TIMING? Why didn't they just bite the bullet and make the merger before FP??? Surley would have got all the "high impact" exposure before the drilling campaign?
AND Pass would have gotten their sharemarket exposure!! Why make it before FP testing and why not try to convince Pass before the drilling of FP?
iii) The GGP options.
What I like is that Pass could have negotiated a swag of those delicious LISTED options in their proposed GGP merger. But maybe exposure through VIL with the 70% interest will provide greater upside. If so, FP must be big because GGPO would certainly run and they have been ignored.
iv) Pass CANNOT come to an agreement with GGP.
Simply put, they must feel GGP will be getting FP too cheap because the GGP offer was generous. Remember, VIL have no cash etc etc...
v) Generous terms reached with VIL.
What in the hell do Pass holders get other than exposure to FP and 10% of an expensive well in Bongo in this merger with VIL??? What do they get??
The only thing they get are shares and increased FP exposure....No dividend, no 100mil barrel prospects etc etc. Just shares and FP.
It's up for dissecting but it seems pretty clear to me..
VIL Price at posting:
2.4¢ Sentiment: LT Buy Disclosure: Held
