All right, welcome to the Negotiator channel. Joining me is Tarja Wist, a legal expert. I always get these mixed up—can I say lawyer, or what, how should I address you?
I'm perfectly happy to be a lawyer. Yes, and an attorney.
Great. And here at Fisken på Disken, an excellent restaurant, we agreed on the topic for this episode: the fair value of a share in legal terms. So, surprisingly enough, the share price fluctuates on the stock exchange or otherwise, but then in certain special situations, such as public tender offers or redemptions, the price is
frozen, and then it matters a great deal whether you are a majority owner or a minority shareholder, and the Supreme Court has handed down two very intriguing judgments on these, so let's delve into these, namely the Ahlstrom-Munksjö case and then this kind of golf share redeemed at a negative price share. But perhaps to start, Tarja Wist, tell us a bit about your background. I know you for having been in major law firms, usually always
the last Wist, probably for alphabetical reasons.
Well, or because I was the youngest, but anyway, yes, indeed, I I graduated from law school at the very end of the 80s as a young ambitious woman and just at the same time as the first, Finland's first Securities Market Act also came into force and it contained the first of these redemption or these, like, takeover clauses, and well, I had been involved in drafting that law as a student at the Ministry of Justice, so it
was like a good start for my career, and after that, it kind of then defined my career, in terms of what I did, so that I got to do quite a lot of securities market law. And then I was also involved when well, even though I was practicing as an attorney, I was a part-time secretary for this working group at the Ministry of Justice,
which implemented the entire European Union securities market legislation into Finnish law when Finland joined the European Union, or first the EEA, and well, and then in 2006, when the new Takeover Directive was also implemented into Finnish law and that's when specifically these redemption clauses were changed, so I was in that working group, and also in 2012 when the whole big
securities market reform happened. So I've had, like, one foot in, or let's say I've been doing these transactions as an attorney, but then I've had, like, maybe a pinky finger in that legislative work.
It's great that you've been able to develop this legislation, but that exciting part, that, well, Rosch- Mr. Rosch- so Roschier Holmberg Waselius then found Wist there as a dynamic team member and this string of names has shortened and now you've ended up in this, well, your own firm, so yes, I indeed started as a young person in a law firm that was called Roschier-Holmberg at the time
Waselius, and then Waselius left and Waselius & Wist was founded in the year 97. But wasn't it in that group of four?
were you at Wist for a little while? No. Yeah ah okay. Well now of course we can look at it this way.
Then Waselius & Wist was founded in '97 and from there I then left. It has been six years now, six years ago, and I then founded Wist Attorneys, so yeah, that's it now pure gold has been panned to the bottom of the gold pan. Good thing.
but with extensive experience in both legislative work, the development of regulation, and in the actual practical implementation.
Now let's start examining these cases. The Ahlstrom-Munksjö redemption, where the fair value was determined even in the Supreme Court at a price that was clearly higher than in the original tender offer. Let's perhaps leave that for last. Let's start with this uh, also a Supreme Court case, the golf share case. I remember you wrote a short blog post about it, that now redemptions are being made at a negative
value, so tell us a bit about the background of this.
Yeah, it is—it's a really interesting case. Well, uh, in that there worked—worked...
Well, uh, so these redemption cases, they go...
so that first we have an arbitration court and then if...
the parties are not satisfied with the arbitration court's ruling, then the parties can...
appeal first to the district court and then, if they get leave to appeal, to a higher...
court. And in this case, because it was a small company, only one...
arbitrator was chosen. In larger ones there are three, even though the issue was this difficult. And, and...
this arbitrator was Professor Seppo Villa, and I've told Seppo many times...
that I would have resolved that differently, and, well, I know that others—someone else too...
in the city agrees with me, but I've changed my mind.
I'm capable of that too. So, well, because, I mean, like, I strongly thought, and still think, that the minimum price of a limited company is zero. Because shareholders are not liable for, like, the company's debts, and you can always get rid of a limited company when it's put into bankruptcy, right? So then you don't have to pay more, so then you
just lose what you've put in there—limited liability. So, actually limited liability, but well, but then again it is so that, uh, then a limited company also allows for the shareholder's liability to be increased from this; we have, for example, these Mankala companies, where shareholders are responsible for all costs and pay, like, for those...
Yeah, and in England there are these Lloyd's syndicates, which sort of were responsible in the past, and maybe still, with their entire wealth for the liabilities of insurance companies. Well, yeah. Well, that's maybe a slightly different thing, but anyway, we have these, and then of course we have housing cooperatives, where each of us who owns a share in a housing cooperative.
Yes. Kvein Miettinen from Kalevankatu, yes, but we have to pay a maintenance fee for these, and this Gumböle Golf was similar, as is often the case in golf companies, so there was a provision in the articles of association that the shareholders must pay a maintenance fee to cover the costs, and then a loan had been taken out there for renovating the field. I don't remember exactly for what, but anyway there was
also quite a lot of debt. There was also a debt share, as in housing companies there often is. And well, as I was then somewhat challenging Seppo Villa, the professor, as to why he made such a decision, I said they could have filed for bankruptcy at any time. Then Seppo looked at me and said, 'Yes, but they didn't,' and as I started thinking about that, then that is perhaps what made me change my mind
about the fact that in that case the Supreme Court then confirmed that the share value was negative. So those who wanted their shares to be redeemed, the minority shareholders had to pay 11 for it 000 euros per share. Yes. And the reasoning stated that, since the trading had been a bit sluggish, but had nonetheless been conducted at a one-euro price, this price should have been positive. And then
it was probably a rather harsh surprise that, instead of one euro, you had to put in 11 grand there, so the shareholders tried to get out of this payment obligation and then get there was also such a funny structure, where the majority of the shares were apparently owned by some association, and that's why there was this 90% shareholder, and if 90% is in the same hands, then
minority shares, over 90% in the same hands, then the minor- a minority shareholder has the right to demand redemption, and here these minority shareholders then demanded redemption and referred to the fact that since these were once sold for one euro, this is now the market price and at this price they can transfer these and get rid of their debt liabilities, but that was not accepted by the arbitral tribunal
nor the Supreme Court; they held that since they had purchased these shares, they had committed to the liability for these debts and the payment obligation under the articles of association.
Yeah, there was this financial charge to Aktia Bank here, and then here now however, one could think that you cannot be, like, forever, liable for cumulative interest or year by year, because this bankruptcy decision could probably be made every year; in principle, it could be made every day, but one could think that one year could be a reasonable time for this bankruptcy clock to reset, so it wouldn't
likely be reasonable to demand that these minority shareholders remain liable forever here, just like, the bankruptcy will really occur later on, but if they forced this redemption themselves, then they in a way also forced this process to begin.
Well yes, of course, but maybe it wasn't decisive here after all. Yes it probably maybe could have and well, maybe it did. It looked, looked a bit kind of ugly, this case from their perspective, but for me, for me it wasn't decisive after all. remember, what was decisive here was that that, well, if considering this theoretically, how I myself justify it to myself, why it's thought of this way is that if you are a shareholder in a company, if you are a minority shareholder, then
the majority shareholders and the board make decisions mm that you cannot influence. So they can make business decisions that are good, or they can make business decisions that are bad, and well, you just as a minority a shareholder can influence them and those decisions affect the value of your share, right? Well, in this case the majority shareholders had decided that the company would not be put into bankruptcy, and that affected your share's
value, so if they had made a different decision, if they had put it into bankruptcy and liquidation proceedings were pending—it requires two- thirds of the shares behind it—then your situation might be different, yeah, in a way this is a bit of 'caveat emptor,' or buyer beware, meaning that, generally speaking, with share structures, you have to look at who the other owners are and especially who the active parties exercising the shareholder's voice are, so
And so then for such a somewhat relaxed Sunday golfer, who is only looking to obtain this kind of golf right of use, they got a bit of a cold shower here, or if you had perhaps inherited such a share, even more so, that it's easy to dig up these kinds of injustices here.
Well yeah, but I mean, it's very unusual that a limited liability financial instrument called a share can also have a negative value. So instead of taking that paper there to be torn up, you have to give another 11 thousand on top of it, so in that sense an interesting theoretical case, and this is how it's been interpreted, and because it is the Supreme Court's interpretation, so apparently this is now the national way to interpret similar situations in the future as well.
That’s right. That’s right. Which immediately brings to mind that it’s perhaps a bit daunting to start owning units in remote areas in housing companies with various pending pipe renovations and units with financial charges.
Exactly. Precisely. So it might be that, well, this single case probably won't have a major impact on the price divergence in the Finnish market, but at least it crystallizes the risk. Meaning, uh, the divergence of prices for apartments in the capital region.
from the provinces. So maybe it's worth it for viewers and listeners to now look a bit critically at whether they themselves or possibly the estate of a deceased person might be facing these, so that ownership is not just a game of positive opportunities, but sometimes there are these kinds of fees or obligations. The owner has obligations. Yes. Well, then of course one
solution is to aim for that ownership group and start fixing these problems, but then you get to enjoy the responsibility of a majority owner. I suppose that's not easy either, especially in these crisis situations.
I should actually invite Lauri Ratia here myself. He has written this kind of 'savior book' about these sorts of shareholder cases that have been in Finland. Good. Well, maybe that's enough background for this golf share case, and now we'll delve into this a bit more as business types, like, how many people's toes we'll step on in this second part. So, the Supreme Court reached a decision in Case Arston Monk. If I set this up in
layman's terms, then correct me if the terminology is wrong, so the Supreme Court concluded that this Ars Mun consortium, which had made a public tender offer at a premium for AS For Munin's shares at a clear premium, well, then when it ends up using this—after exceeding 90%—
redemption right after certain stages, the fair value for this share price was no longer the original tender offer's cash consideration. So, how did this happen?
That's a good question. Can I start from a bit further back? Well, before the year—was it 2006—when this European Union takeover directive was implemented into Finnish law, this often happened to us. We very often had a few of these 'usual suspects', professional investors who never accepted a public tender offer.
the offer, but instead stayed in the redemption phase and then started to practically extort. Well, my apologies to all these usual suspects, if they are still listening to this, but well, it was basically practically like extorting more money for themselves and, well, usually it was then cheaper for the company to pay them off than to go through long disputes and
and wait, wait for like half a year to get them redeemed and be able to develop the company, so they did—it was good business that quite a few of these professional investors made, but well, but then when this Takeover Directive was implemented into Finnish law, then they introduced ...a default provision in the Companies Act, according to which, well,
this public tender offer price is the redemption price, if there are no special reasons. And this was, this was extremely important, because well, it took away these tricksters' business, but well, it also brought a great deal of predictability to this whole process and, and well, I, I, I was actually involved in the working group that brought this, this law, and, and well, I'm like completely of the opinion that it was a brilliant, very good,
good, good well, decision, but well, in this case, in this Ahlstrom-Munksjö case, it was then considered that there were these special reasons why then the public tender offer the price ended up not being the same as what was considered the fair market value in the redemption situation. Mm.
And there were quite a few of these various reasons. I can't quite say, which of these was then the most important, but there were several of them.
Yeah. That's how it is. Maybe if I throw in one at the start, well this process started off on the wrong foot. That is, one group of the Åströms made an offer themselves to the other shareholders and remained themselves, in a way, to take the upside from this deal then as part of this kind of international consortium and in a way, that offering to yourself a bit is kind of slightly recursive
activity. So, indeed, in this case, this buyer consor- one party then made an exchange offer to the family. The family got to reinvest in the company, and almost everyone accepted this.
There are like two sides, two legal questions in my opinion, related to this. Almost everyone accepted it, whereby then a huge amount of shares were consolidated for this buyer consortium. So, on the market, the rest, who accepted the cash offer, well, during the actual offer period, it was maybe 13%. So, when the whole takeover, of this, like, the idea, the idea of this takeover directive in it
the reason why we use this public tender offer in redemption, well, the tender offer price, the principle or philosophy behind it is, hey, if 90% have accepted this price, then it is indeed a fair price and the rest must accept it too, but we weren't in that situation, instead the number of people who accepted the cash offer was really small.
Mm. And then another thing related to this exchange offer is of course the pricing of this exchange offer. Was it the same? Was this actually more valuable? If almost everyone accepted it, while this other cash offer was not accepted by very many, it certainly raises some questions about whether this was, you know, fair
equal, like the same price. Yeah. This was a bit of a timing issue, then problematic. Meaning if the market stayed stable and the company's performance stable or if it had even decreased, then there might not have been a problem, but then the company's earnings performance improved. Then the surrounding
world recovered from COVID quite quickly. So the peer companies' relative value started to rise. So there was this so-called multiple expansion effect, meaning that you had better peer multiples and then you had, well, a better result than when the offer was made. And then, as I understand it, the company's public guidance was not as optimistic for the shareholder as
then to banks and other creditors. So maybe with a figure like this in mind, these were then somehow, in some way, also like factors contributing to the fair price improving over time. So, if a lawyer were to analyze it, first a decision was made that there were special reasons to deviate from the price of this public tender offer, and then they began to investigate
what that price is. And as for these special reasons, well, there were, in addition to what was discussed, another one was that since not very many had accepted this offer and they didn't directly exceed 90%, the offer period was then extended, and during that extended offer period a notice for a general meeting was then announced,
which included an authorization for the board to like issue a huge number of new shares.
It was justified by the need to make acquisitions and everything else like how they are justified, but I guess it was perceived as a kind of poison pill. Meaning, if you don't agree during this extended offer period to sell your shares, then their value will drop when more shares are issued. I don't know, but but this was at least the minority's argument and on these grounds
then probably the Supreme Court didn't take a stand on it anymore, that well, what were the reasons why this was deviated from?
so in a way, the big thing was that this link was broken between fair value—like share-based market pricing—and fair value and then it was up to the Supreme Court to determine what that level would be, or actually, that the link broke between the price in the public tender offer and this redemption price. Yes. And the Supreme Court stated that it had already broken, so they would no longer look at it, and then they started defining that fair price
and there was this interesting thing, that they did not give any weight to the stock market price.
Yeah. And then there's, substance value was looked at, but it's a bit artificial, but book value per share, but it's, well, old school old school, back when these substance values were tossed around. I had my first boss Petter Fagernes here, and well, he recalled in the beginning of his book this merger of KOP and SYP, where back in the day when they were in a way, Finland was emerging in the early 90s from a really bad
recession, so balance sheets and results were a bit all over the place, and then those SYP and KOP prices were then settled in that merger back then, so that then substance for one and yield value for the other, but well, that substance is not very significant now, but in a way the fact that from that market price, i.e., the share price, was sort of deviated from, so that was perhaps the big, big decision. And then we found, interestingly in my view, DCF, Discounted Cash Flow, which is like this investment banker's, you know,
pet peeve or favorite, i.e., the model for discounting free cash flows to the present discounting model. And then it was found, if I now interpreted the papers correctly, that there were even three experts of my type, investment bankers. I've performed several valuations at Translink Corporate Finance with colleagues, and then three parties were found, and if I understood correctly, one of those parties was then judged as not credible, and then these two other corporate
finance houses or valuators, then from the prices they provided this final 21 euro fair value is found, but well, I don't know if you see it roughly like that yourself from what you read so, yeah, well, as a lawyer of course I often also act as an arbitrator in these and well, determine the price, but we lawyers don't really actually determine the price, nor does the Supreme Court here like
independently take a stand on the price determination. They just, or well of course they do take it, but it largely stems from whether they believe or don't believe these experts, right? Like what you and your colleagues now then they present there what is credible. And now they believed those experts, who... Yeah. One of them, by the way, was my old old firm. Greetings to Sisu Partners and its manager Juha Karttunen, that it was certainly fun,
but well, uh, yeah, so that, but then indeed, they don't really, the lawyers don't start doing the DCF themselves, so they have to rely on the reports made by the expert, and it's funny in itself that this WACC came up there, the weighted average cost of capital, which is this kind of investment banker's bread and butter, to keep this like the capital structure weighted after-tax, you know, familiar requirement, so it's great that it
ends up right in the Supreme Court papers then, well, as one important criterion. So good. There have been skilled lawyers who have managed to present it this well.
Yeah, and quite a game once it would have been rolled out there.
I should go to those types of things sometimes myself, to see a bit how the proceedings go, because I'm a complete amateur in legal matters myself, but of course, having done hundreds of transactions, you learn out of necessity to see what you do there yourselves. By the way, as a side note, I was drafting a special act with the Ministry of Finance and the Ministry of Justice, this law for bondholders and representatives and on the rights of the security agent in Finland. A great separate law was enacted, so I got to
look into the legal side a bit, and I thought it was amusing that there were then Professor Tepora and a ton of experts providing the law's grounds. There were certainly enough. There were plenty of them, and it was quite a curious law. Some clauses were slipped in there about things that didn't quite fall under the heading. At the time, I was representing Nordic Trust here in Finland, and I think exactly the things that were supposed to be there went in quite nicely from the perspective of a strong agent. I didn't
do the work myself, but since my bread was being paid for by such a party, well, I was particularly pleased with this specific law, and I suppose no great harm was done there. After all, we had somewhat too strong shareholders for this, so that in a way, this creditor's right to well, defend their own interests, in my opinion, was left a bit weak, as it was a bit like managing a flock of chickens; so now
this bondholder representative and security agent got their very own little law to exercise rights. I mean, it was quite brilliant, because it also made lawyers' work easier. When looking at a legal opinion on these questions, what I was referring to related to how there were slipped in some things concerning syndicated loans as well, which Well, not quite into that, well, a competent one like that...
a security agent runs those as well; they do run them, and usually they really do.
Yes, yeah, but, yeah, but it was—it is, well, that... the...
doing legislative work is actually quite a meaningful task.
In Finland, it works quite nicely because here...
they listen and really, like, often at least listen to...
market participants in those matters, so, yeah, how about something like a securities market act reform, so, how does a project like that really work, I mean, you probably have a million experts to be heard there, and then you have to churn out—well, then the directives might help a bit, directives help. Yeah, it makes it into a kind of patchwork quilt. Yeah, but it works in such a way that the minister appoints a working group and the working group
starts working on it, but the 2012 comprehensive reform of the securities market legislation, which wasn't just the Securities Market Act but all the other laws as well, was a massive undertaking, so there were sub-working groups and a million experts and a large number of those civil servants, so what you could de facto influence yourself was actually quite limited. Yeah, so I—well, then on the market there's
also the SMA, or the Securities Market Act, where some self-regulation is allowed. So, one case example where I myself Then I came across, well, there was this Helsinki Takeover Code, and you've probably got to work with it yourself a bit, but the idea was originally that it's only for these large ones, meaning listed companies, and even there, sort of for those self-regulating. Here are now these
best practices of what's done, where 'comply or explain' was, I think, the principle, that you either follow this or then explain why you don't use such wonderful rules. Then I found myself at Nordic ID, well, uh, as a financial advisor, with Kristel Finne, she as a legal advisor at Fondia, and
then this law, or sorry, this self-regulation package, the Helsinki Takeover The Code didn't apply to us after all, and Finland's first public cash tender offer came along, so then Kristal and I decided that maybe now for reasons of caution, it's better to follow that Helsinki Takeover Code, even if perhaps this 'comply or explain' duty didn't directly apply to us, but is that world familiar to you? It is, of course, and
you acted wisely when you followed it, because it did reflect market practice, didn't it? And if there had been a major deviation from it, then— Well, there was no market practice. We created it.
Exactly. But this Takeover Code spoke more broadly about the market code, regarding what...
was considered good practice in the market. And I think you can get some guidance for M&A as well when thinking about what is good practice, for example, if you think about what types of break clauses the board can agree to and so on. There's all kinds of useful stuff like that for other things too.
Like these break fees that are paid if the acquisition doesn't actually go through. Who pays, how much, and what is reasonable. Yeah, it was—with a non-lawyer's brain— I did struggle with it a bit, because I then had to explain this to Americans in a different time window and also implement it, so...
an investment banker would certainly break a bit of a sweat on their forehead at a few points, but I thought it was really good, I mean it was—it's just brilliant that we got this kind of takeover code, so that good practices were basically recorded and, most of all at least as I saw it, where it was most useful was like how it guided the actions of the target's board,
that, for example, things like these takeover proposals should be discussed within the board and not just a dominant chairman saying no, nothing will be accepted a board working group can—the board can find a working group from among itself that mainly promotes this matter, so that Well yeah, but maybe it needs to be handled first. Well, that's how it is already committee later, so, and but then exactly these questions
like, can we commit to taking part of the costs if this doesn't go forward, and how it's justified, and and how due diligence, when can it be started, what information can be given, these were like very good practices which I think one can seek guidance from there also, also like for other corporate acquisitions. Yeah, and after that, well, well, colleague is probably the wrong word, but well, competitor Jan Ollah there, then later formed
this working group, which then codified this also for this Yes, for the poor little First North companies. I have since then, even though I've gone through it myself and considered it a reasonably healthy learning process to do it, well, I've just started to pity these tiny First North companies. Maybe it's a bit too harsh, and perhaps those takeover-level requirements could be loosened a bit for them, in my opinion, so it could be.
Yeah, in Sweden I think they manage with slightly lighter paperwork, so then it becomes too expensive. And now, combined with this main topic of our discussion, that if you're left with a justified doubt about the fair value of the redemption price, whether it is your, well, like the offer consideration spiced with a premium, so this might involve quite a lot of costs. So it might prevent healthy M&A deals
for public tender offers for First North companies, because there is just now, in addition to the rigidity of the process, also some legal risk, or what do you think it adds to the situation?
I mean, of course, I think it mainly brings these practices, but where do you see the risk there? I find that interesting.
well, for instance, in a way, the documentation is quite a lot lighter, like there are even these basic information brochures made back in the day in Sweden and elsewhere, so it quite a heavy prospectus and, in a way, then, well, everything committing to everything might be quite tough and for a small First North
company, quite, quite difficult and also legally expensive. So it comes then actually from the legislation, these, like, these, these, well prospectus requirements, so they don't come directly then, no Yeah, yeah, they are, actually, should, well, they have evolved a bit here, here, well it came, like, wasn't it already a year ago when it increased, that for example that, well, no doesn't relate to this as such, but, well, like, now, now is it already 30% then, this
well, the prospectus requirement, like, has to be, when previously it was 20% that it had to be made for. These are a little, a little loosened, and in the EU there is this, in itself, understandable line, in my opinion, this COMPASS and Omnibus project, which tries to like, lighten the legal burden slightly, especially for smaller companies.
But you are right that it is being lightened more from the listing phase and in, like, like, like, these prospectus requirements when issuing. But then when we talk about this, like, offer document, which is then the prospectus made when there is a takeover, there are no easements in sight at all, in my opinion. And it is then otherwise a bit harsh for the buyer. I mean, even in that, I remember from this process, because for the Americans, this was such a small firm, since they themselves were a billion-dollar company, so they were sort of
puzzled as to why they had to kowtow so much because of some small company's processes, so if I interpret this a bit crudely like this, then sometimes it could be a bit lighter. In this case, as I understand it, this process wouldn't have withstood this kind of prolonged dispute. Which is what I think is generally a problem in the Finnish court system, that we have three levels of courts and then also
possibly this arbitration thing and everything is very slow, so if you stack them on top of each other, the company will basically to a completely different stage before anything sensible comes out of that pipe in demand. Well, the arbitration process itself actually isn't very slow, so it's quite fast, as I had so it depends on the qualifications of those sharp judges, that well, at least I pushed through one in three months there, one
one just, well, a bit smaller. At first you opened up about this latest challenge of yours, but well, I think it'll take a bit longer, as it's so difficult. Well, yeah. Let's leave it for others to guess what this is.
It's really really difficult. Yeah yeah yeah. But that is like then a little bit, I notice in this investment banking perspective of ours, I'm also this sort of old veteran broker at Credit Suisse and MSV and Pöyry Capital, JP Capital, and elsewhere, and then I've done those IPOs and public tender offers, block trades, and rights issues and all sorts, so I notice that partly due to our capital market's
concentration and narrowness on the retail side, fewer and fewer of those deals are being made. So, somehow you notice that the expertise of the corporate finance crowd is thinning out and then it moves more into the hands of you lawyers, which might be a good thing, but somehow they become a bit more like more about law and mechanics than that kind of artistry and like moving money around, which is at least what I think it used to be, that it has been
this kind of dynamic bookbuilding and then you just notice that sometimes those discounts resulting from them, they are just completely random. So it might be that, whereas before it was a bit of a matter of honor to execute a block trade with a maximum 5% discount, now there might be something like minus 16 there, so it just feels like the grip is starting to slip a bit for our investment banking community when executing these, and I don't know, these two cases mentioned, maybe there has been a bit of a
slip-up in the analysis as well, that people didn't really think it through these things. I can't really say to that, but it is of course true that I also when I did a lot of corporate, well, these listings and, well, capital market transactions there, well, uh, at the turn of the millennium, then our capital markets died for ten years. Mm. We only had some
some, well, Neste's spin-off from Fortum and something like that, but there were like no IPOs for almost ten years.
And then when it started up again, nobody knew how to do them anymore and except for us old-timers, who—except for us— but that, like, it could be that this is a bit the same, and but now there's however, there has been an IPO and now there has been, well, been, well, capital market transactions have actually been very much these takeovers and well, even there, if we return to this, like, our main theme,
then in most of them, when there has first been this public tender offer and then it goes to redemption, redemption, to redemption after that, then in most cases it is quite a fast process and it's like the same price point, so, so there aren't then these special reasons. They aren't very extraordinary, so in those cases it is the, I would say, that legal certainty and speed are also quite good.
Yeah. And quite few, quite few are actually appealed, But, well, some of them are difficult; the very first one I was ever involved in as an arbitrator—it actually concerned, there wasn't a public tender offer underlying it, but it was a merger, because we have the same rule in mergers that a two-thirds majority is required for it to pass. Like, in the general meeting, two-thirds must support it for it to pass. But those who vote against it can
demand redemption—redemption of shares at a fair price—and if there is no agreement on that, then it goes to arbitrators for a decision. And the very first case I was involved in was like this, and it involved—well, it concerned a local telephone company; if you remember back then, these local telephone companies owned DNA's shares, and then certain parties started
to hoard them. And there was this issue, and sometimes they were bought at markets for a Christmas ham, and sometimes some money was paid for them, and well, this was a really, really funny case. It was quite entertaining for us to sit there and think about the fair values of Christmas hams right there. It wasn't Christmas hams, but it was almost the same. I mean, there, well, these redeemers were of the opinion that surely
these aren't worth anything. And then there were some really minority, very, very sharp guys, who knew how to dig out the value of DNA from within and start to go after it driving it through, and it was quite simply a question of whether to pay a thousand or 6 thousand. So, the stake and the range were
huge. Yeah. By the way, one investment I was involved in, Ted Roberts jumped from there to become the CEO of Finda and onto that career path, where he probably still gets to deal with these redemptions or think about the management of the wealth created by telephone companies.
Um, but yeah, thanks for these stories. By the way, now that we've discussed the bond side a bit, should we invite Matti Engelber or someone similar for these debt conversions and like about the exciting mutations of debt, since I got a bit excited about this legal side a little, well, the debt side is where you really find all sorts of things, so maybe as a teaser, the classic thinking is this waterfall thinking, that if you have some
gap that breaks there and even above the value, then then with this waterfall style, from there in the order of maturity the weaker ones start getting cut, but it doesn't always go like that, but we could do a new episode on this, possibly with debt side experts. That would be really good. And if you think before this conversion, considering for example some kind of
the position of the owner of such a capital instrument, where it has been agreed that it is paid out last and the company goes—the company goes, well, for example, into debt restructuring, and those lovely debt agents aren't even available there available, even if— but if you think about having such a capital loan, its terms include that you don't get anything out of it until all other loans have been
paid. And then if the company goes into debt restructuring, it means that these are always zeroed out, and they have been in the worst situation here, and the shareholders are the ones left behind.
This, like, this, this only breaks this. That's right. One could actually pontificate even more about this. But thank you Tarja Wist, and I suggest we head over to the insider side, and since you've watched or listened this far, do subscribe to the channel. But well, when I lured you here as a guest, you were on your way to was it Canada or North America, and there you met like, smart global lawyers, and was it that someone entertained you
by telling you about the psychology of lawyers, or what? Yes. Well, I suggest, that we go to the insider side and discuss briefly how wonderful people you are and what kind of psychological frameworks lawyers have invented for other lawyers to understand. Would this work?