The Broadbase Group, like many other advisers are in favour of the merger. When asked by Waltus whether we would be prepared to state that publicly I had no hesitation in doing so.
Is Murray seriously suggesting that because Waltus were prepared to pay for the advertisement that we were prepared to give our approval to the merger – GET REAL!
Increased Returns
It is easy to see that the extra distribution comes from two areas.
It is important to note that many of the stand-alone syndicates have had to adopt a policy of paying up to 50% of profits to meet potential costs on releasing.
This was, in essence, the reason behind the merger.
Value of Secondary Market
Historically the syndicates have been trading at 3% discount (on average) to NTA. Interestingly, the bigger discounts are on the so called ‘better performing’ companies. Whilst there will be a ‘settling in’ period I see no reason why the same sort of discount would not apply. Indeed some of the MCN’s will probably trade at a premium. At the end of the day the market will decide.
Treatment of Minority Dissenters
My advice is that Murray’s assertion is incorrect.
Loss of Security
I thought that this was adequately covered in the Deloitte’s report.
Individual Syndicate’s Ability to Borrow
I would disagree – I believe the merged company will provide a far more attractive vehicle for lenders. This is a very specialised area in which experience is essential.
Tax Losses
Tax losses are of no benefit to the merged company. I understanding that Price Waterhouse have advised on all tax issues. I think I will rely on their opinion.
I think Waltus have been pro-active which is to their credit. No solution is even going to be perfect and there is always of compromise. I am confident, however, that investors will benefit from the new company.
Marshall Garrett
Principal of Broadbase Consulting Group Limited
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