Member Info for Hounddog10

I am rather of the same view - that a potential bidder might wait to see the voting pattern on the Scheme to help gauge price. If the Scheme fails on the vote the Patels either retreat or up their price. The prize is potentially worth billions if WK and Singida eventually play out well so, provided they can get the finance paying a few tens of millions more may be a risk worth taking.

If the Scheme is voted through then we are still in an offer period and, as far as I am aware, another bidder could come in before the court HEARING, the date of which is uncertain but probably no earlier than end March. It is only at the hearing, if the court approves the Scheme (which I think they invariably do), that the takeover by Scheme is perfected and a day or so later that shares are removed from trading on AIM.

Set against this is that there has been no announcement of other bidders requesting access to the information Saturn has been given (under the Code other bidders are entitled to that). Conceivably, other bidders could come in cold on a hostile basis but hostile bids are very rare nowadays. People want the target board to recommend their bid. That may be very difficult as the board seem very pro the Patels.

As this is a Scheme the Patels are not permitted to buy shares - which is why no forms 8 coming through from them. Different if takeover done by contractual offer.

Kadavul. Thank you for running the list. I am having some trouble with my SIPP provider on the second part of my holding - it is saying that I cannot vote. Last Thursday I escalated it to a complaint which was apparently sent to line management to be dealt with “urgently”. Nothing heard and I will follow up tomorrow. I have voted NO on the larger part of my holding which is held elsewhere.

Yes, my corrected number is correct. 64/(193+64) = 25%. Simple grossing error. Should have got that right first time but tend to be typing fast as this site has a habit of arbitrarily clearing longish draft posts when still incomplete. It normally waits until 95% of the draft post is finished before it does so. Don’t know if others get that. Anyway that is my excuse.

Another hedge fund coming in. Has upped its stake with purchases at 13.23 and 13.26, so presumably they are after a higher bid price.

[My maths was a bit out on a previous note. It is c64m NO votes that defeats the current known 193m YES votes, not 50m. However, the overall point still stands that every one NO vote is worth three YES votes.]

I think the takeover is far from assured, certainly at this price. Decagon have just increased their CFD position and I imagine they are looking at a higher bid price rather than a leveraged play on 13.65 -13.2.

The issue with a Scheme is that every 1 NO vote defeats 3 YES votes. Therefore if the PIs get to close to 50m shares that is enough to defeat the 193m shares already cast in favour (and some of that is only on Letter of Intent). So it is a question of what some of the bigger institutional players are up to. R&M, which seems sceptical of the bid, and Samson, which is likely to to be out for a large return, between them account for 9% of shares or 90m. So, if that happens, the Patels will have to find a further 270m YES votes in a fragmented shareholder base of 1bn shares. They will probably being trying to gauge sentiment among the larger shareholders as to what higher price would persuade them to vote YES if the voting patterns don’t look good. They will almost certainly have approached R&M before , being an existing shareholder, for an irrevocable or LoI and presumably were rebuffed.

The Patels may also switch to a contractual offer, much less satisfactory for them, but they may feel that gives them more leeway to stretch their finances and up price as they are very unlikely to end up with buying out everyone (although they will have to convince the Panel that they have the money to do so).

Then there is the possibility of a counterbid - people may be waiting for the new resources statement and the Singida drilling results. There is still some time to go.

On the Kin and Carta Takeover it has to be said that for the initial bid from Apax there was almost no irrevocables in favour which would have made Samson’s job somewhat easier. Apax then went from 110p to 120p and now the recommended bid by the Board is from another PE house, Bain Capital at 130p. However, it does very much look as though Samson made the difference.

I would agree that the Patels must have some extra firepower but I sense they are quite stretched.

I see Samson has become involved in the Kin and Karta takeover - with the initial bid price being driven up from 110p to 130p. Now about to be voted on.

I don’t think that Kirkby needs a new strategy. Jansen put in place the right way forward - essentially fibre up, massively consolidate offices (300 to 30) and reduce staff. I thought Patterson, who seemed more interested in football, and Garfield as head of Openreach (now ensconced in a nice £4m pa berth at Severn Trent - insane salary) were completely wrong in hoping that they could stretch out the copper network with an enhanced offering. Jansen reversed that.

Going forward it will simply be a grind to 2026 to put in the majority of the new fibre network (I never know if this is calendar to a 31 December deadline or a BT year financial end deadline (31 March) - I am not sure BT ever says). Thereafter much of future capex will be in rural areas with government subsidy.

However, after 2026 they need to tackle the debt. Yes, a good part of the lease debt will have run out and the pension deficit significantly reduced but there will still be a great deal of external borrowing (majority in the Eurobond markets) to be repaid.

2026 is not actually that far away and by then at least one of the big cash outflow overhangs on BT will have gone. However, cash needs will remain tight and although the dividend is (relatively) safe it is far from guaranteed.

A big challenge will be dealing with the CWU which will fiercely resist job losses. BT have started getting rid of jobs (7,000 gone in half year to 30 September 2023) but notably mainly in subcontractors and rather oddly (given ongoing fibre rollout) in Openreach. The bureaucracy in BT needs to be tackled rather than engineers in the street.

I really hope Kirkby does not inflict yet more of this diversity rot on a British business. The record of women propelled into senior business positions is very poor but the main damage done is in the underlying culture of imposing DEI.

A flip was always the most likely scenario. The Scheme Document says they will refinance the bridging loan but that could cover many scenarios.

I wonder what the Court will have to say about the bridging loan. The Court’s duty is to ensure that the Scheme is fair between both shareholders and creditors. Even though the loan is at the Saturn level it almost certainly largely rests on Shanta. Presumably the lawyers have thought it through.

Unfortunately Samson will not respond. The contact is an admin person. However, as another poster suggested it is very doubtful that they are in this just to get 13.65p.

Another 1m bought. Over 3% now. They seem to be going for it.

Be aware that the offer period does not end with the vote and the Court MEETING (on 29 Feb). There is then a Court HEARING where the Court has to approve the Scheme. That is dependent on a large number of preconditions (set out in the Scheme Document) being satisfied. Quite a number of these are Tanz/Kenyan regulatory clearances which may have unpredictable timing.

At a guess, the Court hearing is likely to be around the end of March and the offer period ends the day after Court approval. I think (but am not entirely sure) that any counterbid can come in during the entirety of the offer period ie effectively up to the date of the Court hearing.

I think there is an issue with Lloyds Banking Group on this. iWeb is part of LBG, as obviously is Halifax (I think similar problems with Halifax). Part of my holding is with Bestinvest who are stonewalling me saying that the “asset manager” has deemed this a compulsory event - which is very odd as my account is execution only and an asset manager should have no say. I find to my surprise looking at the Bestinvest T&Cs that they have contracted out my type of account to Embark, which is now part of LBG. Presumably Embark is the asset manager being referred to. So it seems all LBG entities are taking the general line that you cannot vote.

Most of the private investors will be apathetic and are unlikely to vote. Shanta are not very good at updating their Rule 26 page and so the shareholder info there is at 30 Sept 2023. It has changed a bit since then. I would guess in the 40% or so we don’t know about there will be a number of institutions that hold reasonable amounts (but if it is less than 1% no disclosure) and they should vote as they have a fiduciary duty to do so.

Although our votes are important - and if we can get to 50m that would be an achievement we still need a few of the bigger institutions to vote no.

My sense is that there will be a no vote. As I have posted before I think the bid has taken the Patels longer than they thought and probably stretched them financially. They might be carrying on with it simply because they have put so much effort into it they may as well give it a go. It is costing them $5m in fees. It is also costing Shanta itself £2.7m.

£1bn in second line should just be 1bn,

There are slightly over 1bn shares and Patel can’t vote his 4%+. So the voting shares are almost exactly £1bn of which the Patels have secured about 20% to vote in favour of the deal. Based on the last presentation we know where 56.7% of the shareholders are. 20.7% are with Hargreaves, iii and AJ Bell ie retail. 4.6% is with R&M and 4.8% with Cannacord.

It is vital to understand that the Patels need 75% yes votes of those that DO vote. Their current 20% (200m shares) can therefore be defeated by around 50 million votes if there are no more yes votes. The share base is heavily fragmented and much of the retail base are unlikely to vote. I would be surprised if more than 500m votes are cast and probably much less. Therefore around 125 million no votes would defeat the bid. Therefore, much depends on the intentions of Cannacord and R&M. Presumably they have been approached and declined to sign an irrevocable or LoI in favour. They are probably considering their approach. If both vote against the deal I would have thought it will be very difficult for the Patels as that would be 100m no votes. From another bulletin board a R&M fund manage has described the Patel bid as “opportunistic”.

Not so sure. Firstly they are buying at 13.2p for a 13.65p buyout (not in the 12ps) so that works out (if you think about four months from investment to realisation) more like 10% annualised when interest rates are circa 5% plus whatever risk premium you might want to take on an investment So risk/reward seems too low and uncertain for a short term arbitrageur. If there is a no vote there is a chance the share price will/may slip initially and to get their money back they will have to hold. I think they are more likely to be looking for a much bigger counterbid.

However, I could certainly be wrong.

Anyone buying from the date of the Scheme Document (20 Dec 2023) to the date of the vote (27 Feb 2024) is entitled to vote those shares. However, if anyone (previous to 20 Dec 2023 or a new holder) votes their shares and then sells in that period the vote gets disregarded as the right to vote moves to the new holder. The first page of the Scheme Document contains the rather archaic and quaint suggestion that you should pass the Scheme Document and any relevant documentation to the new holder.

The Form 8s are there to inform on who might be stake building (or reducing their stake) to give information on where the vote may go. Samson seems to be continually building their stake. I would guess they are probably a no as the reward for voting the deal through is probably not big enough for someone prepared to see the current deal go through.

Harrogate. I will think about it a bit more. The problem is that I know nothing will happe