The Broadbase Group, like many other advisers are in favour of the merger. When asked by Waltus whether we would be prepared to state that publicly I had no hesitation in doing so.

Is Murray seriously suggesting that because Waltus were prepared to pay for the advertisement that we were prepared to give our approval to the merger – GET REAL!

Increased Returns
Murray’s statement that increased income comes at the expense of capital is wrong. He has not read or does not understand the financial projections that were contained in the prospectus. These were prepared by Ernest Young and were forecast to 2006.

It is easy to see that the extra distribution comes from two areas.

1. Significant economies of scale
2. Payment of up to 100% of the companies profit

It is important to note that many of the stand-alone syndicates have had to adopt a policy of paying up to 50% of profits to meet potential costs on releasing.

This was, in essence, the reason behind the merger.

Value of Secondary Market
Historically the syndicates have been trading at 3% discount (on average) to NTA. Interestingly, the bigger discounts are on the so called ‘better performing’ companies. Whilst there will be a ‘settling in’ period I see no reason why the same sort of discount would not apply. Indeed some of the MCN’s will probably trade at a premium. At the end of the day the market will decide.

Treatment of Minority Dissenters
My advice is that Murray’s assertion is incorrect.

Loss of Security
I thought that this was adequately covered in the Deloitte’s report.

Individual Syndicate’s Ability to Borrow
I would disagree – I believe the merged company will provide a far more attractive vehicle for lenders. This is a very specialised area in which experience is essential.

Tax Losses
Tax losses are of no benefit to the merged company. I understanding that Price Waterhouse have advised on all tax issues. I think I will rely on their opinion.

I think Waltus have been pro-active which is to their credit. No solution is even going to be perfect and there is always of compromise. I am confident, however, that investors will benefit from the new company.