Guest Quebec Posted April 19, 2012 Share Posted April 19, 2012 They can't take all the shares but they have 6 millions already at 1.00 on which they forfeit 40% if they tender to abh. They could buy another 6 millions this week as everybody puke their shares. On these they'd make 50% in a week if they tender to Merc. I would fill up and then say so publicly, which would swing the vote to Merc above 50.1% . Then, maybe abh will outbid, otherwise, they become pretty big in merc which has a good future. They want to protect their abh investment but they are giving a free ride to AbH friends. By tendering to merc, they help abh since abh will take the profit on the locked up shares they just bought. At a certain threshold they are better with merc. Maybe abh could swing at merc later on ;-) Link to comment Share on other sites More sharing options...
rmitz Posted April 19, 2012 Share Posted April 19, 2012 Steelhead is in a position to buy millions of shares around 1.00 and flip them to Merc at 1.40 almost overnite if they elect to vote merc and merc is much better paper and future than abh imo On the other hand, that's an argument that they should want to feed money to ABH to protect their investment there... I thought they had an interest in Mercer also. They do, but Mercer is, I think, the stronger company, so they don't need the help. Link to comment Share on other sites More sharing options...
alertmeipp Posted April 19, 2012 Share Posted April 19, 2012 Why would steelhead willing to give up 40% quick profit to help out other ABH holders? The market is saying the MERC deal is dead. We either go with ABH or hold on. Link to comment Share on other sites More sharing options...
lessthaniv Posted April 19, 2012 Author Share Posted April 19, 2012 The market is saying the MERC deal is dead. We either go with ABH or hold on. Probably because in one of the past offers ABH had 51% + tendered. The MERC deal was $1.30 at the time. I think the market is assuming those shares were Steel heads and $.10/share won't change anything. Link to comment Share on other sites More sharing options...
alertmeipp Posted April 19, 2012 Share Posted April 19, 2012 ABH can also buy at open market. Will still tender to MERC. Link to comment Share on other sites More sharing options...
tyska Posted April 20, 2012 Share Posted April 20, 2012 I've tendered to Merc also. Probably costly lesson on investing in anything in Quebec. Changed my opinion of Fairfax forever also. The regulators seem to have gone out of their way to thwart the minority shareholders getting more value for shares. Maybe the corruption runs deeper than just construction there. Link to comment Share on other sites More sharing options...
alertmeipp Posted April 20, 2012 Share Posted April 20, 2012 I think if MERC can get above their minimum condition, they may still take the shares for $1.4 so I tender mine just in case. Next Monday we will know whether Steelhead tender to ABH, if not, I think ABH might up the bid. Same here regarding Fairfax - I see the dark side of Prem from this. Link to comment Share on other sites More sharing options...
SharperDingaan Posted April 20, 2012 Share Posted April 20, 2012 We will be tendering to MERC as well. There is no reason to leave the $0.40 on the table. Link to comment Share on other sites More sharing options...
rijk Posted April 20, 2012 Share Posted April 20, 2012 is there a risk that both offers fall through? i.e. that no majority can be achieved for both the mercer and abh deals? regards rijk Link to comment Share on other sites More sharing options...
Guest Quebec Posted April 20, 2012 Share Posted April 20, 2012 I suggest those who plan to tender to Merc actually call their broker and do it now to show our support. (It remains possible to withdraw with a phone call if a better alternative comes along) Link to comment Share on other sites More sharing options...
cwericb Posted April 20, 2012 Share Posted April 20, 2012 Tyska: "Changed my opinion of Fairfax forever also." Alertmeipp: "Same here regarding Fairfax - I see the dark side of Prem from this." Add me (and a lot other people) to that list as well. “Fair & Friendly acquisitions” is great PR, but obviously a lot of bunk - and please, don’t try to tell me that Fairfax is some sort of innocent bystander in this. Sure business can be ruthless, that’s the way the game is played. Just don’t try to tell me what a great guy you are while you have your hand in my pocket looking for my wallet. Link to comment Share on other sites More sharing options...
lessthaniv Posted April 20, 2012 Author Share Posted April 20, 2012 is there a risk that both offers fall through? i.e. that no majority can be achieved for both the mercer and abh deals? regards rijk ABH already met their minimum and now own 46.5% Link to comment Share on other sites More sharing options...
rijk Posted April 20, 2012 Share Posted April 20, 2012 ok, thx, i guess that it will be difficult to establish an arb position to capture the current spread of approx 5% due to the mixed cash/shares consideration, you would basically have to guess the mix to determine how much abh to short??? would the mix from the apr 11 accepted shares (1.7 million newly-issued shares of its common stock and CAD$33.5 million in cash) be a fair estimate of the mix for the remaining shares? regards rijk Link to comment Share on other sites More sharing options...
alertmeipp Posted April 20, 2012 Share Posted April 20, 2012 NO PR from MERC to pull the offer yet, I take that it means they still plan to get forward, hopefully the remaining 54% will tender shares them. Link to comment Share on other sites More sharing options...
lessthaniv Posted April 20, 2012 Author Share Posted April 20, 2012 NO PR from MERC to pull the offer yet, I take that it means they still plan to get forward, hopefully the remaining 54% will tender shares them. 1) I think you find out next week that Steel head has tendered to ABH. 2) That gives ABH control and kills the MERC deal. 3) ABH will extend the offer again under the same terms to allow remaining shareholders to tender without the competing MERC offer in the way. For those comfortable in following FFH et al into ABH, I think the proper decision was to sell FBK and immediately repurchase ABH over the last two days. FBK could be had for around $.98 after the Supreme Court Decision was made. ABH traded below $13. ABH stock is priced at $15.83 in the deal. So, this manual transaction gives you 22% more ABH shares not including friction costs. Volume was there to support larger trades. Just under 9M shares in the last 2 days. And, at least you could enjoy your weekend knowing you upped Prem by 22%. ;D (Hopefully, ABH doesn't reprice the deal above that! :'() Link to comment Share on other sites More sharing options...
alertmeipp Posted April 20, 2012 Share Posted April 20, 2012 I don't see why Fairfax likes ABH so much. I think they have moral issue to force this deal on us. So I won't tender to them @1. I don't like their tactic at all. Link to comment Share on other sites More sharing options...
alertmeipp Posted April 21, 2012 Share Posted April 21, 2012 NO PR from MERC to pull the offer yet, I take that it means they still plan to get forward, hopefully the remaining 54% will tender shares them. 1) I think you find out next week that Steel head has tendered to ABH. 2) That gives ABH control and kills the MERC deal. 3) ABH will extend the offer again under the same terms to allow remaining shareholders to tender without the competing MERC offer in the way. For those comfortable in following FFH et al into ABH, I think the proper decision was to sell FBK and immediately repurchase ABH over the last two days. FBK could be had for around $.98 after the Supreme Court Decision was made. ABH traded below $13. ABH stock is priced at $15.83 in the deal. So, this manual transaction gives you 22% more ABH shares not including friction costs. Volume was there to support larger trades. Just under 9M shares in the last 2 days. And, at least you could enjoy your weekend knowing you upped Prem by 22%. ;D (Hopefully, ABH doesn't reprice the deal above that! :'() ABH's deal has been repriced since its pps keep dropping after the offer. Its deal value is less than 1dollar for sure. Even if this is all stock deal, I would rather own MERC than ABH but not like we have a choice. Steelhead will tender to ABH? But their cost basis (99 cent) is higher than ABH's deal value now (92 cents) - Hopefully, they won't take the 8% lost over a 30%+ gain?? But they own way more ABH than MERC+FBK combined. If I were Steelhead, would I take a lost of the rest of the ABH shareholders? My hope/bet is they won't tender on Monday, then ABH raises their bid to make them and rest of the 15%+ owner tender. If they don't raise their bid, this will drag on, PPA will be signed, pulp price may go up. That's not what ABH wants to see. They want to own the whole thing. Link to comment Share on other sites More sharing options...
triedtestedand Posted April 21, 2012 Share Posted April 21, 2012 That's one scenario (low probability?) ... Steelhead doesn't tender to ABH by monday, so it closes the initial tender from ABH ... but then neither does it tender to MERC, thus killing the MERC deal (who have to keep it open 5 days after ABH deal closes) ... this would then allow ABH to come back after the fact, without competition, and bid for the rest with a bit of a face saving premium (wishful thinking?) Then Steelhead would have legal cover of not working totally in cahoots w ABH ... Link to comment Share on other sites More sharing options...
SharperDingaan Posted April 21, 2012 Share Posted April 21, 2012 We're inclined to agree with T&T; Steelhead does not tender to either ABH or MERC at this point. We don't see Steelhead tendering to ABH for a loss, & we suspect that the buyer on a lot of the trades over the last few days was also Steelhead (if only to ensure that ABH didn't get them, & negate the power of their control block ;)) While the lock-up was in place we agree that Steelhead & ABH were acting in concert. Following the legal opinion, & expiry of the lock-up, we think they are now independent - & more so if thier interest actually is the US mills, & they needed to get their operations people in asap. If Steelhead doesn't tender, it's highly likely that ABH comes back with a higher 'satisficing' bid. Link to comment Share on other sites More sharing options...
alertmeipp Posted April 21, 2012 Share Posted April 21, 2012 Exactly, if I were Steelhead, I would demand higher price from ABH (end up getting more ABH shares for them as well), very rational thinking in this irrational "bidding" process.. Link to comment Share on other sites More sharing options...
Guest Quebec Posted April 22, 2012 Share Posted April 22, 2012 I would still take abh all-shares at a ratio of 0,1 for an fbk share. http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/resolute-forest-products-commences-takeover-bid-of-fibrek/msg63392/#msg63392 Currently i have tendered my shares to Merc because abh is too much below fair value (unfair) Link to comment Share on other sites More sharing options...
alertmeipp Posted April 22, 2012 Share Posted April 22, 2012 I would still take abh all-shares at a ratio of 0,1 for an fbk share. http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/resolute-forest-products-commences-takeover-bid-of-fibrek/msg63392/#msg63392 Currently i have tendered my shares to Merc because abh is too much below fair value (unfair) Good luck, we will need that. I doubt they will up their bid by that much tho. Link to comment Share on other sites More sharing options...
tyska Posted April 22, 2012 Share Posted April 22, 2012 I would still take abh all-shares at a ratio of 0,1 for an fbk share. http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/resolute-forest-products-commences-takeover-bid-of-fibrek/msg63392/#msg63392 Currently i have tendered my shares to Merc because abh is too much below fair value (unfair) Good luck, we will need that. I doubt they will up their bid by that much tho. As much as I hope for some of the scenarios, mine is more dour. They have tested the waters as to if there is anyone to stop them from pilfering the minority shareholders. They are now emboldened by what they have found so are free to carry on. Maybe a wink wink nudge nudge to Steelhead to tender or even just vote their shares along for management changes and a distribution of the spoils later. All these thing wouldn't be done if any ethics were involved, but it's pretty obvious that isn't in play here. So I guess good luck is about all we have left. Link to comment Share on other sites More sharing options...
Guest Quebec Posted April 22, 2012 Share Posted April 22, 2012 My thinking with an all-shares ABH offer at 1 for 10 is that this would : - Compensate Steelhead with a premium consideration - Be well received by ABH friends (better than cash to them*) - Saves cash and thus protects the balance sheet - Bring them to >67% that allows to force the balance - Bring them within fair value range 1.25-1.45 - Ensure the whole buyout transaction does not drag - Save faces and reputations somewhat - Bring in Pabrai as an investor in ABH - Allow FFH to tender for inexpensive shares only - Get a large gang together of Fairfax, Pabrai, Steelhead, Oakmont, Chou, Paulson for the next value surfacing... For a little while, abh stock would linger in the low teens as some bought out fbk shareholders unload their unwanted abh stock, giving opportunity for confident value investors to accumulate more. Obtaining fbk for so little would definitely position abh stock for a big lift up, having the fbk cashflows coming in, the powerplant later this year, and the new PPA kicking in. *: http://www.gurufocus.com/news/172379/prem-watsa-buys-more-abh-as-stock-price-falls Link to comment Share on other sites More sharing options...
SharperDingaan Posted April 22, 2012 Share Posted April 22, 2012 Agree ABH will need to issue more equity, but suspect they would go with a cash heavy bid for FBK - Maximum power to a knock-out bid - Paying in cash versus paper is cheaper (no uncertainty premium) - Cheap equity goes to ‘safe’ hands (averaging down private placement to the lock-up group) - Pay for the PPA via a convertible deb/pref. CF can easily service it through conversion - Additional improvement/ability (convertible deb?) in the financial ratios - Minimal ‘after-the-fact’ share price disruption (spike unhappy folks dumping) - Better class of shareholders. Some of us FBK shareholders may smell too much! Nothing that a good scrub couldn’t fix Link to comment Share on other sites More sharing options...
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