Ann: Half Year Financials 31 December 2013 , page-8

Having previously suffered through the "death by a thousand cuts" debacle that was the BRM takeover by Wah Nam, I would not be pinning too much hope on existing large shareholders saving us retail minnows from being taken to the cleaners by a low-ball takeover.

It is naive in the extreme to assume that these 'big fish' will necessarily be in the same boat as regular shareholders when it comes to sanctioning or accepting such offers. As has been alluded to previously on this board, in scenarios such as this, the directors and large shareholders (such as those on whose support you appear to be counting) tend to have their interests looked after in one form or another in order to secure their acceptance, while retailers such us are forced to accept only the low-ball offer.

Watching the developments here over the past month or so, I have had a fairly nauseating sense of de-ja-vu from the BRM saga. It appears to me there has been an almost conscious attempt to soften-up investors for the blow of an opportunistic bid . . . . . witness the failure to realise any progress re advancement of key projects/assets (granted - over a longer period of time), more recent talking-down of prospects, dramatic board changes, and almost impeccably timed disastrous cashflow event with LT.

The BRM saga saw management, who had previously trumpeted the huge value of their flagship resource through an initial hostile takeover attempt, suddenly roll-over and recommend a lower subsequent bid around 12-months later. Throughout that prolonged exercise there was zero progress re developing their primary resource or rail options needed to make the project viable, reports were duly produced ascribing a shockingly low value to the assets and concluding the takeover was thus fair and reasonable, a new huge discovery was totally played down & almost completely ignored in the valuation equations . . . yet the key large shareholders/directors all threw their shareholdings into the lowball bid and retailers got compulsory acquisition. None of it made any sense from the perspective of the large shareholders without their interests being looked after in other ways (. . . whether that was board positions on the new entity, paper bags under the table, or . . . who knows ???). Once the takeover was completed however, then (surprise, surprise!!) all sorts of progress was suddenly being made over the next 12-months – massive resource upgrades and multiple rail options on the table, etc. - however nothing significant had changed re the people, funding, or management approach to the project.

As another example of the different arena in which large shareholders play have a look at the BrisConnections sham a few years back in which a young internet entrepreneur accumulated a massive amount of stapled shares (which carried a impending $1 debt payment obligation per share) for almost nothing, then threatened the company by orchestrating an extraordinary meeting to wind-up the company, before at the final hour spectacularly selling out on his own motion by selling his voting rights for a cool $4.5M to Leighton who were building the tollway for BrisConnections, thus ensuring his wind-up motion would be defeated. Admittedly, this was a very different kind of scenario that was hostile in nature but nevertheless the fact that this fellow was able to extract significant value out of his large shareholding, while the many small shareholders (that basically gave away their holdings to him rather than face possible financial ruin from the stapled debt) could not possibly have achieved any positive outcome from their holdings, is a pertinent example of the different playing fields involved for different size players.

The point of the above examples is not to draw direct comparisons with NXS but simply to point out that we as small retail investors cannot and should not place any faith in large shareholders such as those you’ve mentioned to ensure that our interests will adequately looked after. For what it’s worth I think taipan has been spot-on to date with his analysis of what’s unfolding here, and as small holders we really have no option but to wait and watch it play out from here . . . and, dare I say, simply hope/pray that it is one of the better end-state options that is in train in terms of small holders’ outcome (but don’t count on it!!!).