@Rick brilliant write up and information re Gateway, much appreciated.

Will be interesting to see if there support for the stock knowing this level of detail.

@hainc i take your points re the dilution and capital management concerns but looking historically I don't see this as a concern .

LBL have delivered double digit ROE and ROC % for past five years with a high in the mid 20%.

In respect to share dilution over the same time frame share count has grown from 93.1m to 110m by June 30th 2023 which includes an acquisition. Nothing concenring.

There is no doubt the Gateway acquisition is the largest in their history but Gateway does appear to be a natural fit and on a reasonable EBITDA multiple of 4.5.

LBL themselves are operating on a trailing EBITDA multiple of over 9x prior to this announcement.

I suspect plans re US may need to carefully stepped through unless there are parties keen to move forward.

Disc Held on SM and RL

Thanks @Rick and @wtsimis , nice to hear an alternative and well thought out view in contrast to all the doom and gloom the other day.

At the very least this gives the company access to WA.

Thanks for your comments @hainc @TomS @wtsimis@CanadianAussie. Really, this wasn’t much trouble, some info off the Gateway website with a few comments of my own about the opportunity and fit.

Since then I’ve been thinking more about deal itself. It’s very clever. With Laserbond taking a 40% ownership upfront, Gateway is still the majority owner controlling the WA business. Laserbond has the OPTION to increase their holding to 51% at 4.5 x maximum of 3 year average EBITDA any time in the next 3 years. Options are always clever if you’re the one holding the option, especially when the option costs you nothing.

Until Laserbond takes up this option, Gateway will be doing their darnedest to make sure EBITDA is maximised so they get a decent price for the next 11% tranche of their business. At the same time Gateway own shares in Laserbond, and could eventually own more if script is used as part of the next 11%. So they will also be doing their best to ensure synergies with Laserbond are maximised in the partnership.

The option also gives Laserbond time to see how the Gateway partnership and the mining economy performs over the next three years. Laserbond have the option, but not the obligation to increase their ownership in Gateway. It would seem that both companies have discussed the possibility of a complete takeover of Gateway, but there is no obligation from either at this point in time.

In summary, the deal is very synergistic for both partners, and provides Laserbond with the option to get in deeper if the business and partnership thrives, at a predetermined price of 4.5 x maximum of 3yr average EBITDA, at any time in the next 3 years. It looks very similar to an American Style Call Option (for those who follow derivatives).

@Rick - again, great thoughts.

I’m of the opinion the market overreacted … makes me wonder how the market may have reacted if Laserbond were a bit clearer their partnership with Gateway & clearly outlined the synergies in their partnership.

Either way, I’ve taken the opportunity to grow my position on the back of Fridays sell off.