Raphael Geminder has given Pact shareholders until 7 June to accept his 84c a share offer, saying that will be his best and final offer, as his long-running attempt to take full control of the business comes to a head.
Geminder needs to get over the 90 per cent shareholding mark, at which point he can compulsorily acquire the remaining shares, and delist from the ASX, appoint himself as executive chairman, stack the board with his own nominees, maintain the suspension of dividends, and engage on a review of capital structure and capital management policies.
He is currently sitting tantalisingly close at 87.42 per cent. However, that figure has hardly budged in two months, with the remaining shareholders so far proving resistant to his offer. They include two shareholders, David Harris and Mark Gandur with six per cent between them, who are in dispute with him over a $30m earn out fee from a coat-hanger and security tags business they sold him six years ago.
In his latest letter to the remaining shareholders, his thirteenth of the saga, Geminder says there are “significant risks” for shareholders who do not sell, which include the share price falling back to its pre-offer price of 68c, a 24 per cent downturn. He also says that with the option of delisting from the ASX even without having complete control of the business, just needing a 75 per cent shareholder vote, shares in the hands of other shareholders could have limited liquidity.
None of the 318 shareholders who sold to him but were then offered their shares back – following an undertaking given to the Takeovers Panel after a communication from Geminder to the shareholders was challenged by his opponents Harris and Gandur – took up the offer to buy them back.
Geminder began his attempt to take full ownership of Pact back in September, with a lowball offer of 68c a share, which was essentially ignored by almost everyone. He then upped it to 84c in January, at which point two thirds of the other shareholders took the offer. Since then though it has only been inching along.
Meanwhile Pact itself is among the companies that may be impacted from the sale and possible closure of the Qenos resin manufacturing business. If local resin production does cease it will result in higher input costs and longer lead times for Pact, as it will be forced to source all its resin from overseas.
Pact has been buying much of its virgin resin from Qenos here in Australia, and at present Qenos is still producing polyethylene from its Altona plant, but that is currently under administration, and facing an uncertain future. Pact does already have relationships with resin producers in the US, China, Singapore, Vietnam and Thailand.
