[December 7th 2018]
I figured Anton had a plan... Didn't know this was part of it though...
Saturday 17th November 2018: Straw 1 (of 2).
Northern Star (NST), who own 51% of the EKJV (East Kundana Joint Venture, which TBR + RND own the other 49% of) have offered $150 million to Tribune (TBR) and Rand (RND) to buy their 49%. The breakdown is $112.5m for TBR's 36.75% of the EKJV, and $37.5m for RND's 12.25% of the EKJV. See here.
It seems like an opportunistic bid, and it is, but that's because the majority shareholders of RND and TBR could be in a world of trouble with the takeovers panel, who on Monday October 29 made the following orders:
Tribune Resources Limited – Orders
The Panel made a declaration of unacceptable circumstances on 14 September 2018 in relation to an application dated 20 August 2018 by R Hedley Pty Ltd in relation to the affairs of Tribune Resources Limited (see TP18/67).
The Panel has made final orders (Annexure A), the effect of which includes:
- vesting 12,025,519 Tribune shares held by Rand Mining Limited in ASIC to sell
- requiring the relevant parties (defined as Tribune, Mr Anthony Billis, Ms Phanatchakorn Wichaikul, Ms Buasong Wichaikul, Sierra Gold Ltd, Sierra Gold Pty Ltd, Trans Global Capital Ltd, Rand, Nimby WA Pty Ltd, Lake Grace Exploration Pty Ltd and Northwest Capital Pty Ltd) to provide corrective substantial holder disclosure in a form acceptable to ASIC
- prohibiting the relevant parties taking into account in determining whether they can rely on the 'creep' exception1 (i) the shares to be vested in ASIC and (ii) for a period of six months after the provision of corrective disclosure, any other shares in which they have a relevant interest or voting power, and
- an initial voting restriction until the date that is one month after the corrective disclosure is made and a further limited voting restriction to take into account the effect of ASIC not voting the vested shares.
The full Takeovers Panel (TOV) announcement can be viewed here.
On October 31 TOV announced (see here) that they had received an application from RND seeking a review of the panel's final orders in relation to TBR and while they hadn't yet decided whether to hold a review or not, they had in the meantime made interim orders to stay all 4 of the final orders for up to 2 months - or until further orders are made - whichever comes first. In other words, the largest shareholders of RND & TBR have been granted a stay of execution, but not a reprieve.
Continued in a second straw...
Saturday 17th November 2018: Straw 2 (of 2).
This is the second straw relating to the NST offer to acquire the 49% of the EKJV owned by TBR & RND for a total of $150m, as detailed in the first straw.
The Takeovers Panel (TOV) orders, which have been stayed for up to 2 months (from Oct 31) were made due to findings of unacceptable circumstances in relation to the major shareholders of Tribune (TBR), and 1 of those major shareholders is Rand (RND). The chain of events can be followed by clicking here, then here, then here, and then here. The latest TOV announcement regarding the interim "stay" orders can be viewed here.
During this time, Tribune and Rand (which are managed by the same people, and who appear to be owned by substantially the same people as well) have rapidly sold the vast majority of their large store of gold bullion that they had held in The Perth Mint (that bullion being one of their two largest assets, the other being their 49% share of the EKJV), then very quickly pre-paid tax on the capital gains from those gold sales - to generate franking credits, then paid all of that profit out as special fully franked (FF) dividends. The dividends were so large they were equal to half of the entire market capitalisation of each company on the day before the div announcements were made, without taking the franking credits into account. They then also moved the payment dates forward. It all seemed very rushed.
TBR paid a $3.50 FF special dividend and RND paid a $1.25 FF special dividend.
TBR closed at $4.63 yesterday. RND closed at $2.15.
TBR & RND told us 1 month ago how much gold they have left at The Perth Mint - see here and here. It's 11,413 ounces, worth just over A$19m at today's gold price, double their A$9.5m book value (which is based on cost price).
TBR & RND have a combined market cap of A$361 million now. Apart from that $19m of gold bullion, their only major asset is their 49% of the EKJV. In that light, NST's A$150m offer for that 49% does seem low. However, due to the situation that the major shareholders of RND and TBR have gotten themselves into with the TOV, it might just get accepted.
I think ordinary retail shareholders in TBR & RND are going to get screwed from here.
Disclosure: I bought $10K of both companies to secure the special dividends, then sold out completely after satisfying the 45 day rule, which was 2 days before the NST offer was announced. They've both fallen further since. Happy to be out!