Forum Archive Index - March 2000

["ritchie marr" <ritchie_marr@hotmail.com>]

We all thought we were going to need our sleeping bags when the first 
resolution took 1 hour to just get through the questioning. But in fact the 
other 3 resolutions only took 20 mins between them.

The resolutions were to sell the Shanghai aquarium; to sell the Bliss shares 
gained from the sale of assets of AQL to Bliss corp; To release the 4.8 
million Vendor shares to the chinese directors and the last resolution was 
to re issue withdrawn management options.

SHANGHAI AQUARIUM SALE

It was established that the asset held by AQL could not effectively realise 
substantial shareholder wealth in the short to medium. However the aquarium 
would have had a better financial year in this and consecutive years due to
a/ it being full financial years
b/ not having additional costs relating to set up of aquarium
c/ travel agents and the like, work 1 year in advance for bookings
   and therefore none of these sources of customers for the aquarium
   had been utilised. They were not prepared to begin forward selling
   until the project was fully operational.
d/ the debt repayments on AQL would suffocate any real growth by
   absorbing profits through interest payments etc, for several
   years to come.Expansion of other aquarium assets would take
   several more years, as the market had proven it was not prepared
   to invest in this business with cash to promote it's growth.
e/ Other assets such as the Korean aquarium project in shanghai and
   the Seoul Aquarium had required cash bonds and construction
   contracts to be exercised, all of which required cash, of which
   AQl as it is doesn't have it and shareholders were not prepared to
   put more money in as demonstrated by the convertible notes issue
   falling well short of full subscription.
   The urgency generated through the Government to use or lose the
   land in Pusan and Seoul, resulted in Oceanis taking over both
   assets for a knowingly discounted price due to the strengths and
   weaknesses of each company... AQL in a poor finacial position,
   Oceanis in a cash rich position, with Management capability to
   boot.

The decision to sell was passed, requiring 75% of those present.

The Bliss shares will be issued at A14c to AQL and Oceanis. Bliss is a 
cashed up shell with a net asset backing of A14c prior to the transfer. An 
independent report has given the net asset backing of bliss to be around 
A11c after the transfer, but this is based on the assets of both Oceanis and 
Aql being transferred at or below cost. Therefore the resulting company's 
value ( Bliss ) will be much higher once listed. To add to this perception 
held by AQL management ,
the Merchant Banker involved in the deal has bought a 15 % stake in Bliss at 
18c as well as one other party also taking a % at that price. (Sorry, can't 
remember the exact % or company names..will find out for you.)
Basically, the perception is that these shares should be worth upwards of 
A20c, possibly A25-30c. Based on the Valuation of the Sydney Aquarium. If 
the Directors are able to get these quantities then the value of AQl's stake 
goes up substantially. (A$25 million = A20c times 125 million shares ).
It is likely that the shares will be sold once Bliss has relisted, no doubt 
after a lot of publicity to influence the share price and make them look 
attractive. They will not be sold off on the public market as it is a 
strategic holding and may therefore be sold at a premium to market value. 
Australian attitude to Aquariums is very positive.
There were no guarantees as to the minimum price that the directors would 
get for the shares, however, it was clear that they did not intend selling 
the majority of them at A14c or even close to that.
I asked if these shares would be made available to AQL shareholders to 
purchase prior to the market relisting of Bliss and the answer was, "several 
options were being looked at in regards to AQl shareholders including a 
possible direct trade but nothing as yet has been finalised. I was left of 
the opinion that a buyer or buyers were already lined up, but possibly not 
for the whole %. They did seem very confident that a good price was forth 
coming.
The Melbourne aquarium is well ahead of prospectus forecasts, with around 
9000 people going through the place a day since opening in mid January.
The original 19.9% shareholding AQl bought was never paid for, instead it 
was transferred nearly immediately to Oceanis. This was an initiative of AQL 
Directors once Oceanis collapsed original agreements to have Aql buy their 
assets or merge with them. This then was the basis of the current situation.
This resolution was passed, requiring 75% of those attending to agree.

RELEASING VENDOR SHARES
These shares were already on issue, so it doesn't dilute our holding.
They were a way of AQl getting out of 3 year long water tight contracts they 
had with 2 directors of the management company associated with the Shanghai 
aquarium. To cancel these contracts through the normal channels would have 
cost several million. These shares were set aside for these directors 
anyway, to be gained at the end of their contracts, so we were really voting 
to bring forward their entitlement. This vote would nullify any other 
demands the directors had and along with a few hundred $US, the contracts 
would then be settled.
A query was raised as to whether these shares had in fact already been 
issued, as it was discovered that the Chinese were the sellers of 5 million 
shares on the 28th of Feb.
Interesting to note here that the chinese directors at the centre of this 
resolution, actually had 25 million shares originally, and that they are the 
ones who have been the sellers over the last few weeks.
According to Ken Wikeley, they have finished selling all of their shares and 
have only these newly released shares left. They have also indicated their 
intention to hold these, although this is not guaranteed. Mr Wikeley 
believed that these directors had sold on the basis of " not truly 
understanding the nature of the transaction", and therefore they exited.
This resolution was passed requiring 50% of those attending to agree.

MANAGEMENT OPTIONS
These were in relation to options on issue that were being withdrawn from 
departing directors. The resolution sought to vote to re-assign these to new 
incoming directors. Exercise price for these shares was at 30c, provided the 
price on the market was at or above 40c at the time for 10 consecutive days. 
There was a large sentiment in those present that management options were a 
bad thing and that they were not appropriate at this time until such time as 
the company has a new direction and therefore something for directors to 
work with.
The directors were of the impression that if this resolution failed it would 
have no impact on attracting key players for any future additions to the 
management team at AQL.
This resolution failed.

The meeting was structured to have questions only answered in relation to 
these resolutions however further discussions during the meeting and on a 
one to one basis with Mr Wikeley at the completion of the meeting revealed 
the following information.
The Company did have ideas on the future but it was clear nothing would be 
said or done about them until the sale went unconditional, and perhaps not 
until after Bliss lists, which is likely to be around 4 - 6 weeks at the 
most. What was certain was that another shareholders's meeting would be 
called, and that the most likely sector was technology because they were 
seeking something exiting for the company to get into next. It was said by 
Mr Wikeley in the meeting that he expected it not to be "the Flying Pig" as 
he could think of several businesses that would be more beneficial than this 
company to get into. He suggested something more likely to be along the 
lines of the Force/ ihug merger as a more likely type of direction, always 
finishing with the same saying " but of course we will not discount looking 
at other good opportunities in other sectors ".

Neither Ken Wikeley nor Eric Watson have increased or decreased their 
holdings since last year.

( breathing )

Well now it's your turn to see if I have left something out and fire some 
questions at me.
Hope that helps. I feel much better about keeping my shareholding  now 
through to the new direction, which I don't think we will have to wait more 
than a few months for.

Ritchie




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