The Takeovers Panel has declared unacceptable circumstances in regards to RCU's rights issue. Amongst other things, the Panel found that:
1. Frost discouraged RCU or RE from implementing a dispersion strategy in relation to the rights issue, other than allowing the rights issue to be renounceable.
2. All reasonable steps to minimise the potential control impact of the rights issue on RCU were not taken.
3. It appears to the Panel that the circumstances are unacceptable having regard to:
a. the effect that the Panel is satisfied the circumstances have had, are having, will have or are likely to have on:
i. the control, or potential control, of RCU or
ii. the acquisition, or proposed acquisition, by a person of a substantial interest in RCU and/or
b. the purposes of Chapter 6 set out in section 602 of the Corporations Act 2001 (Cth) (Act).
The remedy wasn't quite as favourable as we were hoping but goes a long way towards mitigating the control impact of RCU's raising. The main elements of the Takeovers Panel's orders are that:
– Frost will have to offer all eligible unitholders the ability to purchase any units that they didn't take up in the rights issue at the rights issue price of $0.40
– Importantly, all eligible unitholders will be able to apply for additional units and the shortfall will be allocated to those who applied for extra on a pro-rata basis. For example, if 50% of the unitholders take up their rights (including Frost), and then those same 50% apply for all they can under the shortfall facility, Frost would end up with about 30% of RCU.
RCU has also extended the closing date for the entitlements offer by two days (until Friday, 5pm) but that doesn't make much difference given you have the ability to buy any units you don't take up under the facility that will be provided by Frost. There's no reason to send your money in early when you have a free option to wait and see what happens over the next few weeks.
From here it all depends on how many investors take up their rights and how many apply for additional units.
We seem to have arrived at a point where IIF and the other large holders need to get together to decide at what price we all hang out for so that Frost can take us all out of this messy situation
One US dollar ?
I don’t think that IIF can do that (at least publically) as a major shareholder – I cannot remember the technical term for that (? promotion)
in a recent podcast Steve mentioned that the net cost/ share (or unit if you prefer) for the fund for it’s total RCU holding was around 60c so that may be a good starting point for negotiations.
Having said that would anyone really want to hang on as a minor shareholder with Wooley? I can’t see many forthcoming distributions in that direction, and the stuff about the USA REIT status in the offer document is essentially correct from my understanding. These properties are much better off in private hands and not listed on the ASX.
If Wooley doesn’t take raise the offer much (say 50c) and just sits there buying on the ASX whenever the share price gets below the offer will he get control?
I suspect that the other major shareholders would only be too happy to remove the responsible entity but what if that delivered control to Wooley. Prisoner’s dilema…
Donald
I accept that you cant collude together to MAKE a bid, but you can certainly have a chat about what to do if there’s one placed before you. I can tell you that I’ll be happy with 60c even if it is still cheap there.
Surely even a firesale of all assets would get us more than 46c
C’mon Greg, pay up and you can have the lollies in no time
I think Greg knows, those who hang on this far are strong holders. He just wants to boost the share price a bit by offering a takeover bid.
46 cents is not a serious offer.
An opportunistic bid if ever I sore one! Drive the price down try and obtain control do not succeed and do this .This is worth well north of offer and without the cooperation of the other main shareholders he will fail.I am very patient and with time and good management this should end up doing well and Wooley is well aware of this(NB this is more valuable each day with the collapsing australian dollar).So maybe the aim should be to replace management and sit tight unless a reasonable offer is delivered(and really I would have thought a dollar a share or more would be appropriate).Good luck Mr Wooley!