Disclosure under Takeovers Panel GN 20

[scep]

Interesting development, which could lead to more fantasy in the shareprice.
Many motives and moves could be 'in stock' for us now.

My own, often wrong, thoughts are that I expect Talga to start protecting themselves against an unfriendly takeover action. Still, if Pentwater does get Loyalty options it indicates Taslga is supporting this move.

Anyway, it is a smart move from Pentwater. How will Talga react is the question.

 

[Diogenese]

For those like me who haven't got a clue what this is about, this is the link to Guidance Note 20:

https://takeovers.gov.au/guidance-notes/gn20-2

Disclosure of equity derivatives​

1. The Panel expects disclosure to be made where the long position of a person and their associates:
   1. is 5% or more and
   2. if so, changes by at least 1% or falls below 5%

of the voting rights in an entity.2 Failure to disclose in accordance with paragraphs 12 to 18 below may give rise to unacceptable circumstances, irrespective of whether a control transaction has commenced.

Like the convent school head teacher, I'm nun the wiser.

 

[curiousmagpie]

Looks like Pentwater have been indirectly increasing their position and have taken a bullish long term view

Pentwater use UBS as a prime broker so could offer some insight into why UBS have been trading the way they have (ie managing the share price downwards to accumulate for Pentwater?)

Will be interesting to see if the short action starts again after SPP closes like it did last time

 

[mpk1980]

Much appreciated! This kind of stuff is also over my head.

I just take comfort knowing that Pentwater was one of the early backers of Tesla and to this date still on their registry! They along with others who've had MOUs and possibly still in discussion with TLG, know a thing or two more than us.

 

[WheresTheMonkey]

For those like me who haven't got a clue what this is about, this is the link to Guidance Note 20:

https://takeovers.gov.au/guidance-notes/gn20-2

Disclosure of equity derivatives​

1. The Panel expects disclosure to be made where the long position of a person and their associates:
   1. is 5% or more and
   2. if so, changes by at least 1% or falls below 5%

Like the convent school head teacher, I'm nun the wiser.

I'm just reading this like a Substantial Shareholder Notice. The last time I saw a Top 5 they held 4.2% of 379,800,000 shares on issue = 15,951,600 shares.

Now they have a beneficial interest in 23,677,105 (6.23%) due to a Cash settled equity swap (their description)

I'm not sure there is much in this other than being a disclosure requirement for their extended Long Position where outright ownership might be somewhat opaque

 

[Semmel]

I have no clue either but this looks to me like they are simply handling the recent issue of new shares. The legal mumbo jumbo is just not obvious.

 

[cosors]

Disclosure under Takeovers Panel GN 20

"...
With swap transactions, the name says it all: swap means ‘exchange’ (also ‘swap’, as the word is both a verb and a noun in English) and essentially refers to an exchange transaction between contracting parties. However, it is an exchange transaction with at least one special feature: in a swap transaction, the parties trade opposing cash flows, i.e. a receivable or another asset for a liability.

Swaps are one of the most successful financial innovations of recent years. The swap partners trade receivables and liabilities in the same or different currencies. Expectations about future developments (such as interest rates and currencies) play a decisive role. This is because swaps involve a contractual agreement on the exchange of future cash flows. And unlike forward transactions, a swap does not involve physical fulfilment.

To understand: the participants in swap transactions basically have two different objectives. Some want to reduce risks, others take risks because they want to realise profits . In the financial sector, there are three main types of swaps: interest rate swaps (asset-and-liability swaps), currency swaps and equity swaps.
...
Why are there swap transactions?
Because one side - for example, a company - can reduce the financial risks of its financing through predictable interest rates, while the other side - for example, investors with an affinity for risk - hopes to make profits through swaps.
...
Swaps can also be linked to shares. Equity swaps allow investors to benefit from the performance of shares without having to buy these securities. As with interest rate or currency swaps, this involves an exchange of cash flows at a fixed agreed date. The one cash flow usually depends on a reference interest rate - such as Euribor or Libor - in relation to a predetermined nominal value. This cash flow is referred to as a ‘floating leg’. The amount of the other cash flow (‘equity leg’), on the other hand, depends on the performance of a share, a basket of shares or a share index. This swap allows fund managers, for example, to secure the value of a fixed-interest security without the commissions and other charges due on a direct investment. Unlike an interest rate swap, a loss can be incurred if the securities perform negatively. Banks and ETF providers often also enter into an equalisation obligation so that the index and ETF fund are guaranteed to have the same value."
source

 

[mpk1980]

How likely is a takeover in reality when EIB, EU and Swedish credit agencies are providing significant funding? Imagine the headlines if a third party, with links to foreign countries were to try? I'd like to think there are measures in place to prevent such an outcome. There also might be legal protection similar to that provided by FIRB?

 

[DAH]

How likely is a takeover in reality when EIB, EU and Swedish credit agencies are providing significant funding? Imagine the headlines if a third party, with links to foreign countries were to try? I'd like to think there are measures in place to prevent such an outcome. There also might be legal protection similar to that provided by FIRB?

G'day MPK. I'm with you. Sweden's FIRB alternative is FDI. Critical Raw Materials are one of the seven business themes captured under the legislation. If Talga receive strategic asset status in Dec that'll no doubt offer further protection. As MT has alluded to, OEM's and their DD and testing (along with requirements) are very in-depth, so you'd assume they would be reluctant to support any takeover (depending on its merits), and I'm guessing given one or more will be a "strategic" partner with Talga. So I feel the more and more Talga progresses and intertwines with Governments, customers etc, it makes any takeover much harder and I think also less desirable. A decent equity stake would make much more sense.

 

[DAH]

I'm just reading this like a Substantial Shareholder Notice. The last time I saw a Top 5 they held 4.2% of 379,800,000 shares on issue = 15,951,600 shares.

Now they have a beneficial interest in 23,677,105 (6.23%) due to a Cash settled equity swap (their description)

I'm not sure there is much in this other than being a disclosure requirement for their extended Long Position where outright ownership might be somewhat opaque

G'day WTM. I've just read this brief disclosure. Have you seen this type of ANN before?
I initially thought it might be that Pentwater hold 23M call options in addition to their share holding. Or perhaps it makes more sense that it's simply that they're in a position where they could potentially at some future time hold 23M shares in TLG, hence take over laws require the disclosure for transparency.
I recall MT saying Pentwater was a friendly shareholder (along with select others), and they are part of one layer of a takeover protection strategy. So I guess we assume it's all part of a broader plan.

 

[WheresTheMonkey]

G'day WTM. I've just read this brief disclosure. Have you seen this type of ANN before?
I initially thought it might be that Pentwater hold 23M call options in addition to their share holding. Or perhaps it makes more sense that it's simply that they're in a position where they could potentially at some future time hold 23M shares in TLG, hence take over laws require the disclosure for transparency.
I recall MT saying Pentwater was a friendly shareholder (along with select others), and they are part of one layer of a takeover protection strategy. So I guess we assume it's all part of a broader plan.

Never seen this before.........until I googled it yesterday LOL and can see it is not a rare occurrence with other stocks.

I agree it sëems to be "option like" but my reading is they still own the original 16M plus 7M "option like" securities = 23M

 

[DAH]

Never seen this before.........until I googled it yesterday LOL and can see it is not a rare occurrence with other stocks.

I agree it sëems to be "option like" but my reading is they still own the original 16M plus 7M "option like" securities = 23M

Thanks. You're likely correct in your thinking. I get the need for the disclosure, but minimal info leaves it ambiguous at best. Anyway, I think what matters is Pentwater appear to like where TLG are heading, and if we apply what MT said re takeover protection measures, then the more shares and options Pentwater hold the merrier.

 

[Diogenese]

I think this is just an obligatory routine announcement when someone holds more than 5% and their shareholding changes. In other words, it's just to let people know how many shared the larger shareholders have, so they can keep an eye on any attempt to stage a takeover, but they are a long way from the 20% required to initiate the obligation to mount a takeover bid.

Thanks. You're likely correct in your thinking. I get the need for the disclosure, but minimal info leaves it ambiguous at best. Anyway, I think what matters is Pentwater appear to like where TLG are heading, and if we apply what MT said re takeover protection measures, then the more shares and options Pentwater hold the merrier.

 

[WheresTheMonkey]

I think this is just an obligatory routine announcement when someone holds more than 5% and their shareholding changes. In other words, it's just to let people know how many shared the larger shareholders have, so they can keep an eye on any attempt to stage a takeover, but they are a long way from the 20% required to initiate the obligation to mount a takeover bid.

I think we all now mostly agree.

But it is encouraging amongst this long long wait to see a large successful long term holder going further into a long position so recently