LPC

[Marilyn Munroe]

www.sharechat.co.nz news "Tauranga 'game-changer' to boost Timaru port's 2015 profit."

Percy hark back to the last time Maersk upped the anchor and shifted to Timaru because Bret Layton and David Viles wouldn't pay the Dane geld. Mediterranean Shipping moved in pretty quickly to fill the gap. I reckon the Vikings would have have swallowed pretty hard when they looked at the filled slots they gifted to their competitor.

This time it could be even worse as Mediterranean are now well established at the port.

Boop boop de do
Marilyn

[Marilyn Munroe]

Logic tells me I should fold my cards and accept the offer on the table. And yet....

SNOOPY

I recommend that you keep your powder dry and wait until the offer closes. Wait until the number of acceptances of the offer is disclosed. If the number of acceptances is low it means the larger of the remaining shareholders haven't risen to the bait and the game is afoot.

If there is a large number of acceptances you can fold your tent and accept the compulsory sale. If there is a small number of acceptances you can decide whether or not to request an expert determination at that point.

Boop boop de do
Marilyn

[Snoopy]

<snip>
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....

OK, made my decision. I am selling around 90% of my LPC shares into the offer and keeping around 10% in the 'hold out' bunker.

My deciding factor in the end was pragmatism. This LPC takeover will be my biggest ever payday from the sharemarket. Frankly I don't think I can leave all my capital repayment to chance. If Simmons comes back with a higher valuation than Northingtons (and I think he will), ironically I will actually lose capital (for me a significant amount) because the CCHL $3.95 offer price on the table is so far above the $3.30 Northington valuation, and still above the likely Simmons value.

However, I would like Simmons to do his alternative evaluation. For that reason I have left 10% of my shares in the 'hold out' pot. I have further decided I can afford the loss that the Simmons valuation might lead to on that proportion of my shares.

I realise this decision will probably lose me my LPC fan club base. But I see no point in being pious in the poor house. Better to keep most of my capital and use this surviving 'sympathetic capital' to fight another battle another day in another place.

My main message here is for remaining shareholders to think how much of their capital they can afford to put on the line. I hope Mike Daniel holds out and there are enough non accepting shareholders to force another evaluation. But if Mike Daniel's, bet doesn't come off, that is probably the equivalent of only one years FPH CEO's bonus lost. IOW he can afford to lose. I have nothing like as much capital at stake as Daniel, but then I am not CEO of an NZX top 50 company. In proportion my potential loss would be greater than his if I held out.

Sorry for folding the big tent, but in the end I have to be pragmatic about this. And I do at least have a pup tent remaining so I have some skin in the game for the fight that remains.

SNOOPY

[Snoopy]

I recommend that you keep your powder dry and wait until the offer closes. Wait until the number of acceptances of the offer is disclosed. If the number of acceptances is low it means the larger of the remaining shareholders haven't risen to the bait and the game is afoot.

If there is a large number of acceptances you can fold your tent and accept the compulsory sale.

If there are a large number of acceptances, the tent will be folded for me and I will get $3.95.

If there is a small number of acceptances you can decide whether or not to request an expert determination at that point.

Yes, but the problem is I will only have a vote in the decision to get Simmons to do an alternative valuation. It will be up to Mike Daniel to decide whether to appeal or not, because he has enough shares to control whether a review happens on his own. So if I hold out then decide I don't want Simmons to do an alternative evaluation, I can't stop the process at that point. I hope you are understanding of my dilemma!

SNOOPY

[percy]

If there are a large number of acceptances, the tent will be folded for me and I will get $3.95.



Yes, but the problem is I will only have a vote in the decision to get Simmons to do an alternative valuation. It will be up to Mike Daniel to decide whether to appeal or not, because he has enough shares to control whether a review happens on his own. So if I hold out then decide I don't want Simmons to do an alternative evaluation, I can't stop the process at that point. I hope you are understanding of my dilemma!

SNOOPY

I think you have come to the right decision.
Mike Daniel may find the cost of fighting, costs far more than he will ever gain.
You may have to read between the lines here,as I don't want to open myself up to be sued.

[Snoopy]

If there are a large number of acceptances, the tent will be folded for me and I will get $3.95.

Running the numbers on the 19th September 2014 announcement.

"3. CCHL has to date received acceptances in respect of 18,392,283 LPC ordinary shares. This constitutes 17.986% of the total LPC ordinary shares on issue."

Before the offer, as at 7th August 2014, CCHL held 81,499,857 shares out of a total of 102,261,279 shares on issue. The 18,392,283 shares referred to above include the 15,825,477 shares held by Port Otago. So the number of shares CCHL has acquired from small shareholders since the offer opened is:

18,392,283 - 15,825,477 = 2,566,806

CCHL required half of the small shareholder's shares to be sold into the offer to wipe out the chances of a second valuation. The total number of shares in small shareholder's hands before the offer was 4,935,945. Half that number is 2,467,973. More than that number is already in the hands of CCHL. I therefore conclude it is 'game over' and all remaining shareholders will be paid out at $3.95, even as I was posting my own acceptance form away.

Quite why CCHL did not say this explicitly in their Friday announcement I don't understand. Perhaps they wanted remaining small shareholders to gradually work it out for themselves to forestall a co-ordinated backlash of anger?

SNOOPY

PS Game over on hold. See highlighting in my post 469

[Marilyn Munroe]

Quite why CCHL did not say this explicitly in their Friday announcement I don't understand. Perhaps they wanted remaining small shareholders to gradually work it out for themselves to forestall a co-ordinated backlash of anger?

SNOOPY

I believe that your assumption that its all over is wrong. This arises because I reckon you are mistaking the current offer on the table as a compulsory acquisition under the takeover code. My understanding is that the current offer is an ordinary offer conducted on a willing seller, willing buyer basis.

Only when the offer closes on Tuesday 23rd will CCHL move to compulsory acquisition to mop up the hold-outs. This is also when the hold-outs can invoke the expert determination provisions of the takeover code.

I have looked in the Takeover Regulations and can not find the source of the statement in 1.4.3 of the Northington Partners report that if 50% accept all other outstanding shareholders must accept the offer.

This takeover stuff is tricky so I may be mistaken.

The Shareholders Association have had a grump about the valuation information disclosed;

http://www.stuff.co.nz/the-press/bus...-on-valuations

Publicly listed companies are valued at higher multiples than private companies like say a sawmill in the bush. My concern about the Northing Partners valuation method is they have chosen a valuation method more suited to a sawmill in the bush than a publicly listed company.

Snoopy in an earlier post hoped that any decisions he made would not loose him his LPC fan club base. You be cool with me Snoopy, you must act in what you believe to be your best interest.


Boop boop de do
Marilyn

[Snoopy]

I believe that your assumption that its all over is wrong. This arises because I reckon you are mistaking the current offer on the table as a compulsory acquisition under the takeover code.

The current offer and the compulsory acquisition process are separate legal processes. I agree with you Marilyn. But I liken the whole process to an express train. Once the train rolls past the first signal (the CCHL voluntary offer), it rolls straight into the compulsory acquisition process. There is no station to get off along the way. The CCHL's 100% acquisition strategy is in effect one process, even if legally it is not.

My understanding is that the current offer is an ordinary offer conducted on a willing seller, willing buyer basis.

Only when the offer closes on Tuesday 23rd will CCHL move to compulsory acquisition to mop up the hold-outs. This is also when the hold-outs can invoke the expert determination provisions of the takeover code.

According to clause 62 of the "Takeover code approval order 2000", with 1st June 2013 amendments, the hold outs will be acting a collective, whatever decision (alternative valuation or not) is to be taken. There will not be an option to go back and accept the CCHL offer at $3.95 if an alternative valuation is sought.

I have looked in the Takeover Regulations and can not find the source of the statement in 1.4.3 of the Northington Partners report that if 50% accept all other outstanding shareholders must accept the offer.

This takeover stuff is tricky so I may be mistaken.

Looking again at the "Takeover code approval order 2000", with 1st June 2013 amendments myself: I can't find the 50% must not accept for an alternative determination to be able to be called either.

The closest I can find is section 23. But that only applies if the offeror does not control "more than 50% of the voting rights in the target company". Since CCHL controls 79.7% of shares,this clause does not apply! It will be very unfortunate if Northington's have misread this clause as applicable, when it is not.

However, section 57(2) of the act does seem relevant.

57(2)(a)

2% of all shares are:

0.02 x 102,261,279 = 2,045,226 -OR-


57(2)(b) 10% of the outstanding shares in the class are:

Outstanding shares (not held by CCHL & Port Otago) as of 7th August are 4,935,945

0.1 x 4,935,945 = 493,594 shares.

So Mike Daniel, with 555,000 shares can control this process alone if he so wants.

The Shareholders Association have had a grump about the valuation information disclosed;

http://www.stuff.co.nz/the-press/bus...-on-valuations

Publicly listed companies are valued at higher multiples than private companies like say a sawmill in the bush. My concern about the Northington Partners valuation method is they have chosen a valuation method more suited to a sawmill in the bush than a publicly listed company.

I share the concerns of the shareholders association. But the hand of the law cannot extend as far as determining the judgement of business valuation experts. Experts following the law cannot always be relied upon to deliver valuation justice.

SNOOPY

[Snoopy]

The current offer and the compulsory acquisition process are separate legal processes. I agree with you Marilyn. But I liken the whole process to an express train. Once the train rolls past the first signal (the CCHL voluntary offer), it rolls straight into the compulsory acquisition process. There is no station to get off along the way. The CCHL's 100% acquisition strategy is in effect one process, even if legally it is not.

The express train rolls past the signal tonight as the voluntary offer closes.

I must say that although I think small shareholders were not well served by the Northington's evaluation, I didn't get mad reading it. Northington's were quite humble and up front in pointing out the difficulties and limitations with the discounted cashflow analysis. Considering who paid for the Northington's report, we small shareholders could hardly expect any other kind of report. No other kind that is, if you accept that ignoring the net cash position of the company in this evaluation was legitimate.

What really got me worked up was the universal unquestioning endorsement of the Northington report by the board. Since Northington's admitted showing a draft of the report to the board, I wouldn't have been surprised if Northington's had been quietly told to say nothing about the net asset position of LPC. Forgetting to mention the NTA was such a basic omission, it is hard to believe every member of the board as individuals would be so careless as to not consider it.

As high noon, or is that high midnight, passes I wait in anticipation of what press release they put out next.

SNOOPY

[Marilyn Munroe]

http://www.stuff.co.nz/the-press/bus...Lyttelton-port


Boop boop de do
Marilyn