The 85% "rule" does not exist. I'll refer you to writings of the law firms Conyers Dill & Pearman, and Cox Hallett Wilkinson. The closest that you can come is the following regarding section 102:
"Section 102 of the Companies Act 1981 provides for the compulsory acquisition of minority shareholders. Where an offer is made by a company for shares (or any class of shares) in a Bermuda company and, within four months of the offer, the holders of not less than 90% of the shares which are the subject of that offer accept it, the bidder can, at any time within two months after the date which the approval is obtained, by notice, require the remaining shareholders to transfer their shares on the terms of the offer. As a result, the bidder may wish to include a pre-condition that the offer is subject to receiving acceptances for at least 90% of the shares, so that it is in a position to forcibly acquire the remaining 10%. Dissenting shareholders can apply to the court, within one month of the notice, objecting to the transfer, though they must prove unfairness, not merely that the scheme is open to criticism."
In SinkHole's case, the buyer has actually relaxed this a bit by demanding "only" 85% acceptance.
Shareholders dissenting to the merger have the right to file for appraisal of their shares by the Court, but they have to formally file for this right. S-106-6A states that upon appraisal, the BUYER HAS THE RIGHT to either pay the appraised price to the dissenting shareholders that have filed for this right, OR cancel the merger.
Nowhere in the law is there any suggestion that 10% or 15% or anything less than a 25% number can torpedo a merger.
You may be confused by the language of s-106-4A, but I caution that you should not confuse 10% of share value with the requirement that 75% of the shareholders in attendance vote in favor of the merger (a requirement that is reduced to a simple majority if such is required under the company's bye-laws).
Must be nobody home today. One could have been excused for expecting some pop in the stock after today's 8-K filing that AFSI had received regulatory approval for the cut-through reinsurance deals. One might have expected the market to have picked up some confidence that approval for the sale to ACP would not be far behind. Guess not.
Mgt. found out that they had been lying to themselves about their earnings for several years. Resulting charge to loss reserves impaired one of the subs and put a couple of others at risk. Customers began to flee like rats out of a burning barn. No divvy.
Depending on when in Sept you made your bold recommendation, aame at best has been a market performer (comparing to S&P 500). So what's the big deal and how do you expect it to launch to $8 without the S&P tripling?
I'll answer for hearn, although he may get there in a different path. Whether or not a company is adequately or inadequately reserved is really a matter of opinion on the part of the observer. One can form this opinion by analyzing the data publicly available, although this is not always reliable and is also subject to how well the analyst really understands the data as well as what the company is doing in the market. Given hearn's active role in the market, I suspect he is looking at where the company is pricing its products relative to the competition and how the company is reporting the profitability of said products in comparison to said competition, especially the level of reserves the company is putting up compared to the competition. I would listen carefully to what he says.
Just my opinion but I think that it is important that the company catch up with its reporting requirements and file its Q313 results sooner rather than later. It is very clear that the stock market has a low level of confidence that the deal with ACP/AmTrust will go through at the announced price of $3. By disclosing its most recent financials, including the FY13 numbers, the companies will be giving investors information they need to make a better judgment as to the ultimate terms of the deal (or even a complete collapse of the deal). Right now the SinkHole is in violation of SEC regulations and its investors are in the dark as a result. Even hedge funds and outright gamblers have a right to timely information.
But this is why we have an SEC, so that managements cannot hide information from investors. They should report out the third and fourth quarter results or publicly explain why they cannot and when they will. Being bought is not a reason, especially when the price was so far below other measures of shareholder value (I say that even though I had earlier projected a takeout valuation well below book value -- I explained my analysis, and management should explain its reasons for accepting such a low price). At the very least, by shining some light on SinkHole's financials, investors will be able to better judge the solidity of the takeout price.
Because that is the level of support that the buyer demands. The reason is that a dissident shareholder (one that votes against the merger) has the right to apply for "appraisal rights" in which the Court determines the price that the buyer must pay for the dissident's shares (those voting in favor of the merger get what the buyer offers -- $3). Because of the wide difference between the $3 offer and other metrics of value including book value and tangible book, the buyer clearly believes that there is a high risk that an independent court may conclude that appraisal rights are significantly higher than the $3 offer, and thus wants to limit the potentially greater amount it could have to pay if more than 15% of outstanding shares vote against the merger.
There are one or two people on this board that believe the 15% limit is a matter of Bermuda law. It is not.
And you believe him?
I would believe my own analysis before I would take the word of management. As for Geo, don't know anything about them but maybe they are pointing where you should look.
Careful, careful! The fun may not be over. This turd is priced too low for the merger to be a sure thing at $3. If the deal collapses completely, I'll be having fun all the way down to sub-penny land and it will be sure to attract a bevy of fools that need educating on the way down. Remember the Alamo! REMEMBER THE TRAINWRECK!
In fairness I cannot see anything through the 2012 accident year that commands severe criticism, other than I think the company was a bit optimistic about its pricing strength, especially in the 2012 year. This of course implies some weakness in the reserves but nothing debilitating. Of course, I do not have access to the company's records and I have not bothered to look deeper into the numbers that are available, so I do not know what may indeed be lurking underneath the surface. The 2013 numbers could reveal a bit more. Have not looked closely at Geo's commentary to decide if it is reliable, but hearn's on-site comments should be considered in the equation.
You have to wonder who the insurer is that is providing the Directors & Officers liability insurance coverage? Whoever it is better be reserving to the full amount of coverage. SinkHole's management and Board of Directors continues to exhibit gross ineptitude, now failing miserably to defend the viability of the $3 takeout, as evidenced by the stock market's continuing disdain. This is a group that appears barely qualified to flip burgers at the local McDonald's, and they all deserve to spend the remaining days of their lives in litigation over the mess they created.
And the extent of your analysis is to cut and paste comments from management...