LPC

[Snoopy]

I guess you would do the same as me if you owned LPC 100%;take the cash,then put the port business either up for sale/lease as is where is?

The ironic thing is Percy, I soon will own 100% of the company. That's because I am a stakeholder in the 'Peoples Republic of Christchurch' which I help fund through my rates bill.
Raf Manji, the CCC Financial Controller, will soon be managing my LPC interests, after his arm's length clean out of those 'filthy capitalistic scum' minority shareholders. And good on him for dealing to them!

The City Council is financially cash strapped. So what I would do is dip into the LPC cash piggy bank to equalise the pain with the rest of the city. Then I would sell down 49% of what was left - with a preference for resident Cantabrians as shareholders, of a new lean LPC, to repay council debt. Finally I would create a special 'CCC share' to ensure the remaining 51% could never be privatised.

I wouldn't sell 'as is where is'. I would have to leave the port with the ability to rebuild a no frills version of Cashin Quay, just not the 21st century dream. Then I would have a separate float to create a new company to build better cruise ship facilities in Akaroa. Maybe that could be 100% sold off? LPC doesn't seem to be interested in tourists anymore.

SNOOPY

[Snoopy]

If the cash value of business assets is $5, and the assessed high value of the business after the rebuild is complete is $3.65, isn't the only sensible action to liquidate?

Likewise, what easier way is there to economically split assets when the majority of those assets are just cash sitting in your bank account? Finally wasn't the LPC insurance pay-out entirely based on market valuations (replacement values) that are right up to date?

It looks to me as though both criteria are satisfied almost perfectly. It is unfathomable to me that the directors have agreed with Northington's opposite conclusion.

Time, as a shareholder, to round up my fears.

The board as a collective have approved and unanimously endorsed the Northington's report. That means they have cemented a position in public, which they cannot go back on without loss of face. If there is a second valuation the board will be funding it. That means there will be no particular reason for whoever comes in next, probably Simmons, to reinterpret the valuation information in a substantially different way, even if the original Northington report contains certain biases. NZ is a small market. So if any other local valuer gave a substantially higher valuation of LPC shares, that outfit would probably go to the bottom of the 'desirability hire list' during any future takeovers of other companies.

In the end, whatever the fairness, psychology will rule. No-one will dare prepare a report that is more favourable than Northingtons, so shareholders can either:

1/accept the unfair offer valuation from Northingtons at $3.30, and be grateful you will actually get $3.95, even if that is still below fair value.
2/ Accept a lower offer of $3.30, as determined by an as yet unselected valuer, probably Simmons, later.

Have I got that right?

SNOOPY

[Marilyn Munroe]

T
Have I got that right?
SNOOPY

I'm not sure. I may have misled you by implying in a post that if the independent experts determination was less than the CCHL offer you would be paid the lesser amount. I have had a look at part 7(Compulsary aquisitions) of the Takeovers Code Approval Regulations 2000 and from my reading of them the amount paid to the objecting sharholders can not be less than the CCHL offer. The code defines this as the default consideration and whatever the experts determination the price can not be less than the default consideration. The is at variance with the information in part 1.4.3 of the Northington report which states that "if the price.....is less than the Offer Price...then CCHL can recover the difference."

I also think the compulsary aquistion notice must also explain the options avlalable for hold-out shareholders.

I think we are gonna need a lawyer.

Boop boop de do
Marilyn

[Marilyn Munroe]

....from my reading of them the amount paid to the objecting sharholders can not be less than the CCHL offer.

Should have read the whole section of the regulations. Clause 62(2) of the regulations supports Northingtons interpretation.

Boop boop de do
Marilyn

[Snoopy]

I think we are gonna need a lawyer.

Things can't have got that desperate surely!

I have been trying to read the LPC NZX announcement from 11:33am, 17 Sep 2014 | TAKEOVER, titled "Waiver of Certain Conditions". But my Adobe Acrobat reader won't bring the page up. Anyone able to access what it says?

SNOOPY

[blackcap]

Its pretty much accept the offer or get a lower price as far as I understand the whole saga.

[Marilyn Munroe]

Things can't have got that desperate surely!

I have been trying to read the LPC NZX announcement from 11:33am, 17 Sep 2014 | TAKEOVER, titled "Waiver of Certain Conditions". But my Adobe Acrobat reader won't bring the page up. Anyone able to access what it says?

SNOOPY

Yes I can read it but I had to resort to 3 different web browsers to get a working link to download. It is a letter fron CCHL to LPC.

Extract;

From CCHL to LPC

2. In accordance with 5.4 of the Offer Document CCHL hearby waives all conditions contained in 5.1 of the Offer Document.

Signed CCHL

This is a standstill condition, the waiver letter gives no explanation why the standstill condition is waived.

Boop boop de do
Marilyn

[Snoopy]

Its pretty much accept the offer or get a lower price as far as I understand the whole saga.

It all depends on the remaining small shareholders (i.e. excluding CCHL and Port Otago) cumulatively sell half the balance of shares on issue.

If more than half are sold into the offer, then everyone gets $3.95 (all shares are already ex the 20c dividend). If

1/more than half of the shares are kept AND
2/ Mike Daniel (largest small shareholder, or a roughly equivalent number of small shareholders together ) complains in writing

THEN we get the valuation done again and that new figure is binding for all the hold outs.

SNOOPY

[Snoopy]

Should have read the whole section of the regulations. Clause 62(2) of the regulations supports Northingtons interpretation.

Boop boop de do
Marilyn

OK, I am saving Mr Simmons some time here (even though he hasn't been appointed yet) by outlining how far he can go without upsetting management when he compiles his alternative LPC valuation report.

Look at my post 436 and you will see that actual container volume growth over nine years far exceeds Northington's forecast figure of 4% volume growth per year. And that outperformance assumes the Fronterra / Silver Fern farms contract is lost forever. Boost container volume to 5% growth per year (p32 Northington report) and the mid price valuation rises from $3.50 to $3.66. And a 5% container volume growth is still far less than historic container volume growth. That looks like a legitimate correction.

Northington's have really attacked the forecast EBITDA margin. I think

1/ the retirement of million dollar Pete, and
2/ the consequent downsizing of next tier management packages and
3/ the sale of LPC's castle like but unoccupied HQ at the tunnel gate could deliver half the management forecast gains alone, no problem.

So that could boost the company's mid fair value share price by a further 14c.

Combining those two effects and fair value from Simmons looks to be:

$3.50+$0.16+$0.14= $3.80

That price includes the 20c dividend (already paid). So 'hold out' shareholders look on target for $3.60 per share. Not great when $3.95 is already on the table.

If Simmons has the courage to tackle the net asset value question, then we could be looking at a payout of $4.95 for hold out shareholders. I rate the likelihood of that as about 10%, verses 90% for the other option. So the 'expected value' of the Simmons mandated payout would be:

0.9 x $3.60 + 0.1x $4.95 = $3.74

That is less than the $3.95 already on the table. Logic tells me I should fold my cards and accept the offer on the table. And yet....

SNOOPY

[percy]

www.sharechat.co.nz news "Tauranga 'game-changer' to boost Timaru port's 2015 profit."
"Prime Port says the deals position it as the prime central hub of the South Island as it acts as a feeder for POT,which is dredging its shipping channels to make them big enough for a new generation of larger container vessels."