Comments on the Important Note from the GMComments on M. Thornton’s e-mail to us:
“A fair offer is a fair offer”
I’m sorry, but I don’t think the offer is fair. I think it is opportunistic. (See previous posts by HLDalongtime for actual numbers)
Keep in mind that shares that give you controlling interest are worth more than those that do not, so there should be a premium paid on them.
“…it is apparent that a number of Partners hope a Yes vote will be achieved,…”
It isn’t surprising in the least that there are investors out there who have lost all confidence in this venture and want out. I don’t blame them and I agree an avenue should be offered them to exit at $1.00 or so if they so wish, but those of us who believe that the worst is behind us and wish to continue to participate should be able to do so.
“I can’t speculate on what the future value of the HLD Units may be. I am not an accountant, financial advisor or a business valuator.”
This is an accurate and appropriate legal statement. He can’t speculate for you or I, we have to make our own decisions. However, I believe that he is an astute businessman who sees a lot of potential value in these assets, as he always has. You can bet that there have been some pretty favorable analytical estimates done that we haven’t been privy to.
“It is common for companies to purchase equity in a publicly traded business at the lowest possible price before tendering and offer. In this case the group making the offer could easily have purchased many of the 1,476550 HLD units that traded on the TSX-V at an average price of 56 cents.”
This statement doesn’t sit right with me for two reasons:
1. The stock was so thinly traded that any interest in accumulating a significant number of shares would have driven the price up.
2. I’m not 100% sure on this one, but I think there is a legal requirement that if someone is accumulating shares for the purpose of gaining controlling interest they have to come right out and make an offer, they can’t sneak around and quietly gather up shares at rock bottom prices. The key word here may be “many” as they may be allowed to buy a certain percentage of the shares before having to come out in the open and make the offer. But if they had done that this whole non-arms length thing would have looked even worse than it already does! So I don’t think anyone is being exactly philanthropic in making this offer.
The rest of page 2, all of page 3 and most of page 4 emphasize all of the most negative aspects of this project. It is gloom and doom and is skillfully done. There are no lies in it but it definitely makes me, as a limited partner, feel that there is no hope except for this one last chance that is being so benevolently offered.
· I get the feeling that we, MT’s children were held for ransom and if MT did not sacrifice himself by accepting higher risk and agreeing to manage the properties that we would not be given nearly so generous an offer. What a saint! (Sorry, MT, but you deserved that one)
· I feel threatened that we will lose over $450,000 if this offer doesn’t go through as we will have to cover the costs of evaluating and voting on this offer. Well, that’s life. I guess it will have to come out of our profits. Please give more careful consideration to such expenditures in the future.
· I am threatened with dilution of my shares with the necessity of another unit issue. That might be a good thing, because then our assets will have to be presented in a positive light to get our share values up before such an issue.
· Then the hand wringing. “When will the presently limited market for our building lots improve? As you know, our purchasers must be willing to buy the land, work with an architect and builder, and finance construction of their new home – while still paying carrying costs to live elsewhere.” The market IS improving and maybe there is something that can be done to make the lots more attractive. That’s what we pay the general partner to do.
· Rising costs of construction, the risks of the land development business, nasty surprises… Sheesh! What ever happened to “Profit with the Land Developers”? We all know those risks are there. There has been some tough sledding over the last 12 years, no doubt, but I still believe we are through the worst of it.
· Finally, near the end, a small positive note. MT remains optimistic that the eventual value of our land will be higher than it is today. This should be nominated for understatement of the year!
· I am pleased though that MT agrees to continue managing the properties. He has learned a lot through this project. I’m sure that he, like us, would not have taken on this venture if he knew at the start that it would be so full of headaches. However we are in this together. I am wondering if it might be beneficial if we, as limited partners, were used as sounding boards a little more, or asked for ideas. If we put our collective heads together maybe we would do much better.