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seboya
Posted on: Jul 11 2018, 05:53 PM


Group: Member
Posts: 12

I guess they think they've got the other 3 big holders over a barrel - accept the 16.7cps, or forever be stuck (after the Weeks interest is sold) in the husk of a company that trades a few thousand shares a month.
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seboya
Posted on: Jul 11 2018, 03:51 PM


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Posts: 12

The big holders would be wise to take the offer (or any counteroffer from others) else risk being stuck (in an almost completely illiquid stock) in the husk of RCO once the Weeks royalty is sold off.
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seboya
Posted on: Mar 23 2017, 03:08 PM


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Posts: 12

Who knows mate. Everyone had thought FZR's royalty over the Canning Basin was before costs until BRU started paying them net only and FZR sued for it.

Like you said, it comes down to the terms of the agreement. You could probably email the new RCO directors and ask, I assume they'd be full bottle on it (given they're all mostly FZR directors now).
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seboya
Posted on: Mar 22 2017, 05:49 PM


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Posts: 12

Is the Weeks Royalty on oil/gas at the wellhead (your $6.50/GJ), or after operator's costs (some amount less than this per GJ)? See e.g. the FZR/BRU royalty dispute in 2015.
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seboya
Posted on: Mar 2 2017, 09:51 AM


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Posts: 12

Dr D,

I haven't ever really looked into it - I'm a large FZR holder, hence my interest in RCO.

I do like the history behind it though: "It was Dr Weeks who in the early 1960s famously told Broken Hill Proprietary - as BHP Billiton was known then - that he knew where oil could be found within a relatively short distance of its Melbourne head office, but before he would tell, he would want a 2.5 per cent over-riding royalty on any future oil and gas production. BHP agreed and Dr Lewis is said to have told the BHP men to turn around and look out the window towards Bass Strait, or more particularly the waters offshore from Gippsland." (from The Australian article in 2013 when RCO picked up their 0.025%).

Seems like a trip to the library might be in order!

http://trove.nla.gov.au/work/10875418?q&am...sionId=12706146
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seboya
Posted on: Feb 22 2017, 02:20 PM


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Posts: 12

Crikey the EGM results were closer than I had thought! FZR sneaks across the line by less than 1%.
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seboya
Posted on: Feb 20 2017, 03:05 PM


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Posts: 12

The magic numbers are 47.0% (so they can creep to 50%), 50.0% so RCO becomes a Controlled Entity, and 90% so they can delist.
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seboya
Posted on: Feb 16 2017, 05:45 PM


Group: Member
Posts: 12

In fairness to all three companies, the lawyers' costs for 1) RCO dealing with HPR's failed backdoor takeover last year, 2) FZR launching their bid for RCO and 3) RCO responding to the FZR bid, all will have artificially inflated those admin figures. RCO specifically bitch about it in their Annual Report: "One factor beyond directors’ control was the complete waste of administrative time and substantial legal costs arising from a Section 249D requisition under the Corporations Code. This action was begun in September 2015 by High Peak Royalties Limited, a competing player in the royalties sector and a relatively new entrant on to the Royalco share register as a substantial shareholder. The requisition was claimed to be in relation to Royalco’s operating costs but was in reality little more than an attempted takeover by backdoor methods without shareholders receiving any benefit. This action was rightly rejected by shareholders."

An interesting exercise is to compare the directors' and key management's remuneration for the three companies. For the year ending June 2016: FZR = $390k, RCO = $587k, HPR = $779k. Tip of the hat to HPR here, their directors' fees are actually very reasonable, it's just that their key management's fees are high.
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seboya
Posted on: Feb 15 2017, 04:20 PM


Group: Member
Posts: 12

Re whether Samuel Taylor Coleridge will support the spill or not is irrelevant, even the combined holdings of HPR/Noontide/ST can't overcome FZR's holding. Although how they vote will be interesting to see, in terms of what message it sends to FZR.

QUOTE
Logically, it would be a far more effective company structure (particularly from an admin cost perspective) to merge HPR/RCO/FZR, but I assume the various companies all want to be "the boss".


I completely agree, 100%. But like you said, when all of them want to be the boss, nothing is going to happen.

I wonder perhaps if Noontide would sell up if offered FZR scrip in exchange for their RCO shares, given I assume as an investment company they're wanting to hold on to an interest in the RCO assets? It would piss of the FZR holders (myself included) no end, but if the right balance was struck between issuing FZR shares and the gain from taking over the Noontide RCO holding, the FZR directors might be able to sell it to FZR holders. The issue here is that they'd run afoul of the Corps Act creep provision if they couldn't do a package deal with either the remaining HPR shares or the Samantha Taylor shares to get them over the 90% mark. In fact, I suspect Samurai Tailor would be very open to a FZR/RCO scrip swap, given they like "double digit" investments and FZR has the potential for that once BRU get off their arse in the Canning Basin.
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seboya
Posted on: Feb 15 2017, 03:41 PM


Group: Member
Posts: 12

Yup. The fact that HPR sold up half their holding shows that NPR/Noontide are no longer expecting to win the board spill motion next week, and are effectively prepared to cede control to the proposed FZR directors.

Also of interest will be to see if FZR end the offer process with more than 47.0% - if they do, then they can grab another 3% on-market (within the "creep" provisions of the Corps Act) and have RCO become a Controlled Entity of theirs.

I'm also looking forward to seeing the Top 20 shareholders of RCO after the offer period closes. We know who the top four are (FZR, Noontide, HPR, and Samwell Tarly), but who else with a somewhat largish holding has held out on FZR?

Finally, I speculate as to the end-game of Samwise Gamgee. Have they bought $1m+ of RCO stock as a long-term investment? Or is the plan to greenmail FZR for a quick return on investment? If the latter, would that then induce Noontide/HPR to sell for the same or similar price, resulting in FZR owning 90%+ and delisting?
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seboya
Posted on: Feb 14 2017, 12:27 AM


Group: Member
Posts: 12

It'll be HPR, they're very cash poor at the moment.

Question is, are they opening a long term investment position, or just looking to greenmail FZR for a quick 20% return on investment..?
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seboya
Posted on: Feb 7 2017, 03:25 PM


Group: Member
Posts: 12

I think the key phrasing in the RCO announcement is that “Fitzroy is expected to be able to procure the delisting of Royalco”. So yeah, per k-marie’s point below, they’ll need 75% which is not gonna happen without both HPR and Noontide rolling over. But if both HPR and Noontide do sell, then every remaining shareholder will be up the proverbial creek with FZR controlling ~85% of the company and therefore then “able” to procure the delisting of Royalco. I think the RCO directors are therefore telling all smaller shareholders that there’s a chance that HPR and Noontide could sell which would screw said holders – i.e. the current directors are finally for once looking out for the smaller shareholders.

So what are the chances that HPR and Noontide do sell? Well their takeover of the board via the spill motion appears dead: FZR currently controls 23,105,451 votes (ignoring the ~+1% updated holding noted in today’s broker handling fee announcement) which is far more than HPR and Noontide’s combined total of 20,338,132. There’s fewer shares left on issue than even bothered to vote at the last AGM (12,565,950 didn’t vote), so I don’t see ~3million of them suddenly deciding to pick the HPR/Noontide directors over the FZR directors. Could some of those who voted For the remuneration report switch sides and now vote for the HPR/Noontide directors? Perhaps, but there’s only 2,436,201 of those outside of the David Ogg shares which FZR now owns. There’s 624,201 shares which voted Against the remuneration report (which presumably includes the holdings of dr_dazmo et al.), so we can assume at least a majority of those might be in favour of the HPR/Noontide directors over the FZR directors, but it still seems a stretch to find ~3million votes for the HPR/Noontide directors out of the 9,271,170 shares currently not controlled by FZR, HPR or Noontide.

So if we assume the HPR/Noontide takeover of the board is dead, will HPR/Noontide stay in the company, or sell up now at 20 cents? Therein lies the question for all other holders – because if HPR/Noontide do sell (because their takeover is dead), the rest of the small holders are likely to get (much?) less than the current offer price when FZR moves to delist RCO.

PS: Note also FYI that the 3% “creep” provisions of s.606 of the Corps Act don’t apply if the substantial holder’s voting power increases “from a starting point that is above 20% and below 90%”. HPR and Noontide own a combined 38.6% of RCO. If FZR exits the takeover bid with (or at some point in the future creeps up to) a holding of more than 51.4%, they could just turn round to HPR/Noontide and offer them say 25 or 30 cents per share off-market and boom, 90% limit reached and insta-delisting and compulsory acquisition achieved.
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