BHP appeals to staff loyalty

Press, 10 February 1986, Page 32

BHP appeals to staff loyalty

PA Melbourne The managing director of BHP, Mr Brian Loton, has appealed to BHP employees to stand by their company in the fight against Robert Holmes a Court’s sAustl.9 billion partial take-over bid. Speaking to a meeting of about 250 employees after a BHP board meeting, Mr Loton said the BHP board planned to retain BHP as a single entity by doing everything in its power to resist the unwanted sAust7.7o a share bid.

The meeting was not open to the press but BHP staff later told journalists that Mr Loton had given a “lively and occasionally humourous pep talk” to boost morale. The staff said Mr Loton told them the bid was having a detrimental effect on the company as its resources had to be moved from normal constructive operations into defensive positions. BHP spokesmen said there was no statement from the board meeting apart from confirming it was agreed to send a letter to shareholders urging them to reject the Bell offer “out of hand.” In the letter, BHP’s chairman, Sir James Balderstone, told shareholders that any partial offer for BHP shares was likely to be inadequate. “If the (Bell) bid is made, the support of every shareholder will count and I ask you therefore to think very carefully before parting with your shares,” Sir James said.

He said the interests of shareholders were paramount and the board would be examining any offer “with the utmost care.” “The board stands ready and well prepared to counter it on behalf of shareholders when the time comes,” he said. Sir James said shareholders should note the BHP share price had recently fallen to adjust for

the one-for-five bonus issue. This is because shareholders effectively now had 120 shares for every 100 previously held, he said.

BHP share prices jumped to 750 c after the Bell announcement but later dropped on Tuesday to 740.

In Sydney and Melbourne on Friday BHP fell 2c to 718 while Bell Resources jumped 20c to 510, and Bell Group put on 6c to 700.

A BHP spokesman said BHP had no right of access to the Bell offer document — lodged with the Victorian Corporate Affairs Commission (CAC) on Thursday — until it was registered by the CAC and cleared by the National Companies and Securities Commission (NCSC). This was expected to take a few days and while the company had many “good sources of information,” it was not prepared to make any definitive predictions. It could not be confirmed whether Mr Holmes a Court had met the NCSC in Perth to give further details of his bid.

NCSC spokesmen would not comment, and Mr Holmes a Court was unavailable.

Meanwhile, a Melbourne resources analyst, Tony Moody, said that the share prices for the three “players” in the take-over appeared to represent good value for investors at current market prices. Mr Moody, of broker A. C. Goods, said the market was likely to be relatively volatile for some time with people trying to second-guess developments. But, from the figures, he was fairly positive about shares in BHP, Bell Resources, Ltd, and its parent Bell Group, Ltd, he said.

BHP would do all it could to close the gap between its market price and the 770 c a share offer price but the international

oil price weakness would make the task difficult.

“I think the drop in the BHP market price since the bid is the result of a combination of low international oil prices and uncertainty among investors about the Holmes a Court bid,” Mr Moody said. BHP’s profit outlook for 1986/87 was relatively flat because of the oil prices but the medium term outlook was still quite good. “Mr Holmes a Court said BHP has reached a plateau and I agree the growh seen by BHP in recent quarters is unlikely to continue,” Mr Moody said. The institutions seemed to have adopted a wait-and-see attitude on the offer, with most wanting to see details of Mr Holmes a Court’s plans for BHP and his financing arrangements before committing themselves.

Some institutions said the offer was not unattractive but would like to

see a time element introduced into the bid, Mr Moody said. They wanted to know how long they would be in the dark about how many of their shares would be accepted. “I have roughly calculated earnings per share (EPS) of 83c for Bell Resources for this year but if the bid is successful and about 30 per cent of BHP is equity-accounted in the Bell Resources results, the EPS could be about 100 c a share,” Mr Moody said.

“I think Holmes a Court’s play to date has been brilliant.

“The thing to remember is that he has been masterminding this for some time and, as far as I can see, it is going exactly according to plan, with Holmes a Court in the box seat.

“If he acquires control of BHP at this price, he will have secured an excellent investment at a very cheap price.”