Incitec Pivot Ltd T.IPL

RE:RE:RE:RE:RE:RE:RE:RE:RE:IPL asking price-24$

[Maxmoe]

What a crock! Where's your precise proper salient load of horse hockey? What the he77 do you mean a third party doesn't care about the details of a second party's bid. Of course they friggin do numb nuts. Plus, as usual, that's not what I said. I, rather ominously said, the OSC will care a great deal about the details of this "economic interest" malarkey made up lawyerese term. I also made no inference that swap,warrant,option etc owners are entitled to vote, but I did suggest the osc has a keen interest in them when it comes to what the osc considers when it comes to insiders and bids. Look that up, and everything else yourself. Here is one cut and paste from the act. No, I'm not interested in doing your homework. Brookfield has plenty of clever lawyers on staff.

Separate and supplementary insider reporting requirements exist for derivatives (which are outlined in Part 4 of NI 55-104). A reporting insider is generally required to file a report about a derivative transaction involving securities of the reporting issuer if:

• the transaction directly or indirectly alters the insider's economic interest in a security of the reporting issuer or economic exposure to the reporting issuer

You can twist my words or feign ignorance all the way to the covid protected virtual meeting at 20 queen. That's the hive for the osc and all it's worker bees for those that don't get this reference.

FreddieMac wrote: The economics of whatever instrument BIP has entered into with a 3rd party in the swap does not matter a hill of beans to a potential 2nd bidder for IPL.   They could care less, as the only thing they care about is the price of their offer and whether enough shareholders (not folks who merely hold an "economic interest") will ultimately vote in favour.    The fact is that investors who hold swaps, derivatives, options and such are not shareholders and thus can't vote, and voting is what determines the outcomes of M&A pursuits.    Any new bidder (other than BIP) would simply look at BIP's 10% share ownership as a postion they would need to pay for, just as if it was any other shareholder or set of shareholders. 

What BIP has done with the swap is given themselves the upside if their bid (even if unsuccessful) ends up surfacing value that is then reflected in the share price.   So they benefit if their bid is successful and also if they end up catalyzing activity of IPL that ends up surfacing value that increases the share price even though their bid may ultimately fail.

As far as your talk about the OSC etc., the key is that BIP does not control the voting of the underlying shares of IPL.  That is the "ownership" test.  That is why they stopped just shy of 10% ownership, because it would trigger insider reporting and other regulatory obligations.   You do realize that BIP has legal counsel and that experienced folks who do this often get engaged to advise on these sorts of processes? 

But let's follow your reasoning and see where it gets us....  so what is it exactly that you say the OSC should be doing about or interpreting BIP's bid ?   Point to the relevant legislation or whatever authority you purport to rely on and explain what the implications are for this process. 

There are a lot of half-baked theories being spouted about on this board but alarmingly little in the way of salient detail backed by (a) factually precise analysis or (b) proper legal interpretation.  Many grand statements, lots of bluster, but litte in the way of analysis that actually carries the day outside of forums like this.  


 

Maxmoe wrote: Here's a nit, for you nitpicker. I didn't say bip had 20% voting interest, I said "unless another buyer has tied up 20% ownership" . Brookfield can use made up words like economic interest but I beg to differ and I'm SURE the OSC will as well. It's ownership if they "own" the economic interest. Brookfield unashamedly refers to their 20% interest. If that's not how it's currently clearly defined in the securities act, it will be made clear to them. I suggest you review the act re warrants,options, swaps,derivatives etc and how the osc interprets them with regard to insiders and permitted bids. By the way, here's an interesting question that will make you and Brookfield squirm, who wrote the other side of that swap? They are already underwater unless they hedged with say call options, but who wrote the calls ... and so on.  Follow the money and I doubt the osc will be happy.

FreddieMac wrote:

This is interesting but incorrect    Brookfield has tied up an approximately 20% economic interest, but I point out that does not mean they hold a 20% voting interest.  There is an important distinction.  

If you go and read the bid filed by Brookfield it shows that they own slightly under 10% of IPL's voting shares and have achieved the remainder of their equity exposure via an instrument called a total return swap. It is important to point out that such an instrument does not confer the right to vote the underlying shares. So although they may benefit economically if someone else ends up buying IPL, they will not be able to vote 20% of the shares against such a transaction, as they only have voting control over slightly less than 10%.   Many commentators on this board have missed that distinction so as I said, go and read up on your Canadian Securities Law.   

 

Maxmoe wrote: The "go shop" clause is also accompanied by the right of first refusal, ROFR, clause. This makes it near impossible for a new bidder to emerge given the old bidder can, and will, just match the offer. IPL is in play now so unless another buyer has also tied up 20% ownership, the "go shop" clause is useless. Much better for shareholders is what we have today. IPL is free to entertain any and all options to maximize shareholder value whether it involves Brookfield or not. The "go shop" alternative ties IPL to involving Brookfield whether IPL likes it or not. A poor choice.

 

FreddieMac wrote: This is an excellent piece and correctly identifies the use of the "go shop" term.   It gets used when a bidder is confident that there is a very low (or manageable) risk that a competing and better offer will emerge.   When no such competing higher offer is forthcoming, the original bidder can then say "see, we are the only one willing to pay $X today and although you may feel your shares will be worth more in the future, NO ONE TODAY IS WILLING TO PAY A PREMIUM ABOVE OUR BID TO GET ACCESS TO THAT BRIGHT FUTURE YOU ARE POINTING AT." 

It will be most interesting to see how much information IPL management suddenly sees fit to release publicly, after they have been so quiet for so long.  There could be some decent surprises to the upside, and that would help explain Brookfield's interest in IPL in the first place.

Looking forward to reading the Directors Circular that IPL will file in about 2 weeks. For those of you who don't know what that is, go and read up on your Canadian Securities Law.

downwithdotcom1 wrote: sorry, its YOU that are being naive-BROOKFIELD is calling out management/BOD with their "its too low" defence (maybe to protect their own jobs) . With a shop it around clause -this would avoid any kind superior break fee that sometimes is part of the language in a takeover. FACT: IPL is only worth what some-one is willing to pay for it. BROOKFIELD has let it be known that they would have raised the price subject to getting access to private data . Now,, IPL is going to go public with confidential information (ie off take agreements, status of partnership ) and yet IPL refused to share this same information with a suitor all this time..WHY????  They could have signed a legally binding confidentialy agreement to enter advanced disccusions and then to argue a price based on known financials but, again, IPL refused. WHY??  No harm lost - IPL can still reject the stated offer but do this with datapoints as to why not. The question that needs to be asked is management working for the shareholders, or are now working for themselves?? Anyways, the story is out and its the markets that will decide-i expect if IPL does release private info - BROOKFIELD will up the offer to $18 + and then a white knight offer will be needed to get a higher price..dwdc