It would not be the first time that the AFR has got things wrong. We should wait and see what the announcement is on Monday morning. Any CR would require shareholder approval so there is no capacity for this to be done unilaterally.
Assume the worst case scenario that Allied called in the loan and the company was insolvent then an adminstrator would have to be appointed by the board or past that given a default Allied could appoint an adminstrator. Even in this scenario, the companies net assets would be worth more than 20 cents a share suggested and the Administrator would undertake a trade sale to maximise the return for the creditors. In any mop up, Allied's shares would be erased as much as any other shareholder. There is lots of precedents where the lenders interests or security over an asset have been set aside where a company and there is a conflict of interest so they could not rely upon any pre-emtive rights to any assets except on the basis of a commercial valuation.
Given that the board would be shown in any subsequent ASIC investigation to have had a clear conflict of interest, probably a failure with respect to continuous disclosure and a failure to have been acting in the interest of all shareholders (but only the major shareholder), they would be personally subject to all sorts of heat from ASIC and be criminally exposed under the corporations act. That is something that any company officer would not take lightly.
Beyond that, the Chinese do not need any press whereby they questionably "thieve" australian assets when they are generally able to pay the highly undervalued market price. Expect lots of adverse press attention and potential government involvement on this if it is the case. So for the moment wait and see what the CR actually says on Monday. Most things we worry about in life are unlikely to transpire.
TAM Price at posting:
56.9¢ Sentiment: Buy Disclosure: Held
