accesing hawsons through a silver gate., page-24

Spec 101, I very much agree with the sentiment of your post - although I am more optimistic about the future. The liquidator will not sit still and the new owner of BMG's inerest will want to get things moving.

I have no objection to ASI/Silvergate seeking a seat on the board. However, I thought I'd set out one of the reasons why I couldn't vote in favour of their proposals to remove existing directors.

I assume that ASI/Silvergate will be looking to acquire BMG's interest in Hawsons. If they succeed in acquiring 40% of Hawsons, then I think as directors they will be conflicted out of making any significant decisions about Hawsons.

As a director of CAP, they have a fiduciary duty to act in the best interests of CAP. CAP will sometimes need to make a decision that involves short term cost for long term gain or the other way around. But what happens when the short and long term needs and desires of CAP and ASI conflict - and when will we ever know.

Consider the following and assume that ASI acquires BMG's 40% interest in Hawsons. Let's say that there's an opportunity to realise some short term benefit from Hawsons by selling part or all - whilst the offer is significantly more than the current share price it is also significantly less than Hawsons real value. I suspect the board and most CAP shareholders will say lets hang on a little longer and try and get something closer to full value. But what if ASI is in real need of some cash or perhaps just wants some cash to pursue some other opportunities. Would the ASI directors vote to realise a short term gain to realise the benefit of the 40% they acquired from BMG? Would their obligations to ASI conflict with their obligations to CAP?

The revers might also occur. Let's say ASI wants to wait to realise Hawsons full value but CAP has run out of cash and wants some cash to proress its other Braemar interests. CAP has the fund raising with a low share price of selling Hawsons to realise enough cash to complete a BFS on other Braemar interests. Would the ASI directors vote to realise a short term gain or against given that they would lose less from diluting CAP than from selling Hawsons. Would their obligations to ASI conflict with their obligations to CAP?

Therefore, if they are on the board and hold BMG's 40% interest in Hawsons, should they be excluded from voting on anything to do with Hawsons? I think so.

Therefore, I they need to exclude themselves from any board vote relating to Hawsons, based on their proposals we would be left with a board of three.

Obviously this would not be an issue if ASI do not have a direct interest in Hawsons - but we wont know that until the liquidator has sold. Until then, its just another reason why my vote is with NIck and the current board.