# I am launching a takeover bid



## skc (6 July 2009)

Anyone ever had any experience in launching a takeover bid? I am interested in acquiring all of the shares in HGO.

Current price ~$0.24 with 413m shares outstanding, so market cap = $99m
Long term debt = $44m
Cash at hand ~$8m

Options outstanding ~45m, of which 20m has strike price < $0.3.

If I was to launch a takeover bid at $0.3. For 413+45 shares I will only need $137m + $44m for the debt. So total cost is $181m

I receive from HGO $8m cash + $200m from STO (who just bought their stake), resulting in $27m cash net. Pay ~$5m to bankers, lawyers and accountants, and I get $23m in my pocket.

I also walk away with all of HGO's assets and a free option on ESG being taken over.

Why not? Who's with me?

Anyone done this before?

Would a bank lend me $180m on the condition that STO is about to pay me $200m?


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## Kez180 (6 July 2009)

*Re: I am launching a takover bid*



skc said:


> Anyone ever had any experience in launching a takeover bid? I am interested in acquiring all of the shares in HGO.
> 
> Current price ~$0.24 with 413m shares outstanding, so market cap = $99m
> Long term debt = $44m
> ...





ok so when you put a buy in for 413,000,000 shares @ $0.24 what do you think will happen to the price?


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## doogie_goes_off (6 July 2009)

*Re: I am launching a takover bid*

If it succedes let me know - I'll take the copper resource off your hands for  $1M.


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## nomore4s (6 July 2009)

*Re: I am launching a takover bid*



Kez180 said:


> ok so when you put a buy in for 413,000,000 shares @ $0.24 what do you think will happen to the price?




Exactly, you'll need to offer a premium to entice people to sell up or accept the takeover offer.


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## skc (6 July 2009)

*Re: I am launching a takover bid*



nomore4s said:


> Exactly, you'll need to offer a premium to entice people to sell up or accept the takeover offer.




I am offering $0.3. That's a premium of 25% over the current price, and 35-40% over the VWAP of the last 14 days.

With $1m from doogie I will increase my offer to $0.31.

Obviously I will do an off-market offer rather than on market $0.24. But I might accumulate 20% first and see what happens.

Shame that I don't have the $36m required.


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## beerwm (6 July 2009)

*Re: I am launching a takover bid*

how about;

get a 50.1%+ controlling interest,
Sell off all assets/ repay debt.
And pay bonus shareholder dividends,

sure.. not the big win you were going for but a nice safe payout, all the same.


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## Naked shorts (6 July 2009)

Are you serious?!

Have you ever heard of an "investment bank"? Basically every one of them has a M&A department which you should get in contact with BEFORE making your intentions public LOL


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## nunthewiser (6 July 2009)

lol actually thought about buying out a low cap bio once . mkt cap was 3 mill ... change the name , find some rocks and ramp the sucka on hotcopper

nirvana man


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## trainspotter (6 July 2009)

Talk about salting the mines!! Te he ... Go you good thing !


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## matty2.0 (6 July 2009)

I'll greenmail you first.


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## skc (6 July 2009)

Naked shorts said:


> Are you serious?!
> 
> Have you ever heard of an "investment bank"? Basically every one of them has a M&A department which you should get in contact with BEFORE making your intentions public LOL




I have contacted Babcock and Brown. Unfortunately their phone was unattended.



matty2.0 said:


> I'll greenmail you first.




What is greenmail? Nevermind, googled it.



> Profiting from an attempted hostile takeover by forcing the target company to buy back the hostile bidder's shares at an inflated price


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## Strident (6 July 2009)

Trouble is with these sorts of takeover bids is like with TMX - IRM:

 - Need a premium
 - They make a placement
 - Maybe a rights issue
 - No-one can be bothered giving you shares considering they bought it at a much higher price and their holding has shrunk to an insignificant value
 - Costs money to send out all those booklets.

In all seriousness, a better way would probably to buy up lots of shares and then "highlight" the fact that they have cash > market cap on your favourite discussion forum.


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## skc (6 July 2009)

Strident said:


> Trouble is with these sorts of takeover bids is like with TMX - IRM:
> 
> - Need a premium
> - They make a placement
> ...




Totally different situation. 

TMX - IRM was swapping 1 bit of worthless paper for 2 bits of different yet equally worthless paper. My takeover bid will be a cash bid, with 25-30% premium.

The booklets cost nothing to send out. There are probably no more than few thousand shareholders. Say $10 a book it will cost in the order of $25-50K max.

The biggest cost is for the investment bank to organise for me some bridging finance - probably 350bp above BBSW will do - over say 3 months. That's $180m x 8% x 3/12 or ~$2.5m. Plus say 60-80bps in fees, which is another $1m.

So $5m in costs should do it after paying the accountants and lawyers.


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## vincent191 (6 July 2009)

I don't get it, why would STO have to give you $200m?
They didn't buy it off you did they? 

By the way did you really try to ring Babcock & Brown? Under which rock has you been hiding? Why not try ringing the people in the silver doughnut or any of the major banks. 

Do let us know how you get on ok? This is very entertaining.


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## sleeper88 (6 July 2009)

matty2.0 said:


> I'll greenmail you first.




hahaha..all someone needs is a 10% blocking stake  not hard..getting +90% is harder :

If u won the $90m oz lotto or can convince either winners to lend u the money then u might have something here lol

good luck


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## Timmy (7 July 2009)

skc is a smart cookie.

I'm in.


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## Sean K (7 July 2009)

skc said:


> I have contacted Babcock and Brown. Unfortunately their phone was unattended.



 LMAO!


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## skc (7 July 2009)

vincent191 said:


> I don't get it, why would STO have to give you $200m?
> They didn't buy it off you did they?
> 
> By the way did you really try to ring Babcock & Brown? Under which rock has you been hiding? Why not try ringing the people in the silver doughnut or any of the major banks.
> ...




Sometimes it is worth bringing a sense of humour to these forums.


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## trainspotter (7 July 2009)

Nahhh ... let them wander around aimlessly in the dark for a while. 

SKC ... have you tried Lehman Brothers or Storm Fianancial Group for backing? I heard they have room on their loan books for just one more tilt at the windmill.


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## nathanblack (7 July 2009)

are you really that stupid?

didnt you read the beginners forum?

open a comsec or even westpac account. they will let you buy shares without funds available. 

now you just need to decide to buy as many shares as you can on market(with money you dont have) or maybe get others involved. im willing to buy $250k worth, provided i dont pay for them.

cheers

PS there may be a small dishonour fee involved, but some have had that waived for a first offence.


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## skc (7 July 2009)

nathanblack said:


> are you really that stupid?
> 
> didnt you read the beginners forum?
> 
> ...




That is untrue. They will let you buy shares without funds available *up to a certain amount*. I doubt that amount is $180m.

I have contacted another investment group called Allco. Funny their phones also didn't get answered.


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## sammy84 (7 July 2009)

Would they accept personal cheques??


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## nunthewiser (7 July 2009)

sammy84 said:


> Would they accept personal cheques??




im happy to ...

po box 1234 geraldton WA

will send you some paper as soon as cheque clears 

thankyou


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## wonderrman (7 July 2009)

Is this bloke serious?


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## nathanblack (8 July 2009)

skc said:


> That is untrue. They will let you buy shares without funds available *up to a certain amount*. I doubt that amount is $180m.
> 
> I have contacted another investment group called Allco. Funny their phones also didn't get answered.




try a few million first and see if they accept it, if not, lower the amount until they do. if they do accept it, put in more buy orders until they decline. maybe register for several online brokers and max out each one.

then invite a few of your closest friends along for the ride, the can repeat the process above. you may not get 100% control, but a seat on the board would be nice. might be enough to vote for a special dividend or give yourself a payrise.

after reviewing the numbers im interested in about $500k of stock, which happens to be my limit for over the phone orders with my current holdings.

have you called eddie groves? he might have some available funds and i think he is unemployed at the moment. might have to rename the company DEF though.


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## skc (9 July 2009)

After more detailed analysis the deal is off.

Fundamentally it still works - you use the STO cash to buy out the company, and you get all the assets and the ESG "option" for free. However, I have no interest in the company - only interested in getting my hands on the cash. Unfortunately, the STO cash is just enough to buy the company out and I will have to realise any cash from asset sales, which will be troublesome.

With $172m of STO cash incoming, HGO should pay off the bond at $44m, keep say $30m in the books (enough for >3 years at current burn rate) and pay the rest out as a special dividend. That equates to ~$0.25 per share.

So I think a better course of action is to pressure the board into making a special dividend from the windfall before they pxss it up the wall.


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## doogie_goes_off (9 July 2009)

I was still up for $1M for my new copper mine. I will probably just have to take them over myself and sell it to a holding company with a dodgy name for $1 now.... I just saved $999,999!


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## skc (9 July 2009)

doogie_goes_off said:


> I was still up for $1M for my new copper mine. I will probably just have to take them over myself and sell it to a holding company with a dodgy name for $1 now.... I just saved $999,999!




FYI they don't actually have a mine. They only have copper in the ground and plans on paper.


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## doogie_goes_off (9 July 2009)

What a short term outlook you have - I was going to get out there and dig it up myself and start a smelter in the Adelaide CBD.


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## moreld (9 July 2009)

skc
there have been plenty of net-nets in the market of late. I bought into Facet Biotech (FACT on nasdaq) which is trading for around half of it's net cash. It is painful waiting for the market to realise the situation and seeing management continue to hoover up and waste the cash. (I'm not saying that is what HGO or FACT mngt are doing, but it is often the case.)

I've only had a quick look at HGO and I see the CEO takes home around $550k a year on top of his 5% or so holding in the company.

You should pursue your plan of pushing for a special dividend. Corporate raiding is not good for the soul. Use the force, but do not succumb to the dark side.


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## vincent191 (9 July 2009)

This posting is for general discussion only....if anyone is seriously thinking about takeovers to reap a small fortune I suggest you research the following.

1.) Master Corporate Raider - Sir Ron Brierley, he is the King of takeovers. Very successful.

2.) Alan Bond - very successful until  it all caught up with him eventually. His early success that propel him from a ten pound pommie migrant to a billionaire is complusory reading for any inspiring corporate raider.

3.) Bell Resources - Robert Holmes Acourt. Read his failed takeover bid for BHP. The minnow nearly succeeded in capturing the whale. Bell resources eventually failed in the bid and Bell itself became a takeover target and was eventually taken over by Alan Bond. Holmes Acourt losted his fortune and died early, a broken man. His wife Janet took over the family business and became a very successful business woman in her own rights.

Anyone planning to raid a cash rich Company to siphon off the cash and leave the dead wood behind must research this case. Note....many people involved in this scheme went to jail.

4.)  Warwick Fairfax's attempted takeover bid of Fairfax newspapers. Warwick is also known as "the man who couldn't wait". The money would have been his sooner or latter when his mum Lady Fairfax dies but he could not wait and launch a very expensive failed attempt to gain control of Fairfax. Malcolm Turnbull first came into prominence through his involvement in this case. He represented the junk bond holders. The other banker (I forgot his name) fees for advising Warwick was $50 million in 1987 dollars.
Warwick now lives in the USA in comparatively less wealthy circumstances.

So there you go skc....plenty of home work for you this weekend.


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