Timing is critical
I draw a potential problem to every ones attention, it is something that has the potential to bankrupt CTP causing the company to go into administration.
If one accepts that at least MB (and possibly RC) are working towards gaining all shares in CTP then the following needs to be understood.
At the moment the Deed requires that CTP pay all the costs of the forthcoming vote to either accept or reject the offer. (Stupid bl**dy clause and all in favor of MB)
That amount has been estimated at two million and forty thousand dollars (clause 3.1 (i))
(
Transaction costs ) “
as at the Delivery Time on the Second Court Date,
Central’s total external costs paid or incurred in relation to the Proposed Transaction
(including all legal, financial, printing, shareholder communication and any other costs)
do not exceed $2,040,000(other than costs associated with any appeal process
contemplated by clause 5.1(m)(ii));
Assume that the NO vote has good chance of getting and in fact does get up extinguishing the MB offer as at that time and date.
Then it is possible (in fact probable ) that MB makes another offer fairly quickly, lets say within 2 or 3 weeks, but this time lets say 28 or 32 cents for a total cash offer. (NOT suggesting it will occur or that it is a fair price)
Now depending on the quality of the NO vote, it will depend how much they increase to pick up the vacillating sellers.
But the real problem is that assume the same terms and conditions in the Deed, then CTP has just wasted $2 Million and if the board accepts the new offer
CTP is up for another $2 million to put the second offer before the shareholders.
That would mean of the current $6 million over $4 Million has been wasted on votes leaving CTP very, very close to being insolvent with only $2 million (plus monies coming in).
In my opinion it is CRITICAL that a s249D notice be issued ASAP so as to force the board to hold the meeting for the replacement on the same day as the vote for the offer.
There are certain statutory requirements when issuing a s249D notice. the relevant number of members or 5% of share holders. This gives authority to the notice.
The BOD can either accept the notice or reject it (as they did in 2012) in order to give them time to find a replacement MD,
It is then up to the BOD when they call the meeting and that can be up to 2 months after the request is made to the company
s249D (5)
"The
directors must call the meeting within 21 days after the request
is given to the company. The meeting is to be held not later than 2
months after the request is given to the company" .
So the later the CPSA issues a s249D ( if it does) the later the BOD call a meeting and dependent on when the s249D notice is served places the current board and MB in a prime position to issue another offer and suck us dry.
Should the issuance of the s249D notice be allowed to occur many weeks later, it will allow MB to make a second offer and the BOD to accept and there goes another $2 million because the new board will be bound by the new Deed.
If a s249D notice is issued, and it is called for the same day as the No vote meeting then It is HIGHLY Likely that RC etc will all resign after the NO vote and let the new board come in unopposed, that removes the possibility of another MB offer being accepted by the current board.
Food for thought.
CB
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