Chairman underwriting rights issue, page-9

Hi @japanfresh

Some good questions and as per my earliest post on this thread - I think there may be a power play going on here.... or maybe a well constructed plan to make Carnegie act. Yes they apparently sorted out their issues, but did they ?

I can understand your comments around DGR given the cash level, BUT, given this is a 1 for 4 raising it is more about who ends up with the largest % holdings and ultimate control. NM and DGR were never going to miss this opportunity after the recent drill results to up their holding. The fact that NM via Samuel Holdings is also the underwriter (for $1) means he will happily soak up any stock not taken up. If DGR did not take up their entitlement and simply assumed that Samuel Holdings will get it, needs to read the paragraph on shortfall entitlements. As to how DGR funds the purchase - that's their issue and I guess they can expect a capital raise of some description. It is worth noting that DGR only took up 21m of their 22.725m share entitlement, so obviously cash was tight.

In relation to further flow results - no chance as it is extremely rare for a company to say anything (unless absolutely urgent) in the middle of a capital raising. They would have known when they could and should do this raising. I appreciate they need to raise capital and I would rather this then continually issuing expensive C/N's. It was always going to kill momentum at some stage, but my gripe is with how early in the share price rise they acted. Mind you I will be accepting all of my entitlement and apply for extras at 10c as I like the upside potential mid term. Perhaps we can get that momentum back in September/October ?

Regarding the Options and C/N's converting - the owners had to exercise/convert prior to the Record Date - ie 7pm 10/8/18. They will then participate with us as Retail entitlements. The 5m options probably will give it a miss, it will be interesting to see if Tribeca exercises its 41m options now (?) but the 375.2m convertible notes is a large chunk of the company as we only have 405m ordinary shares on issue. So if they (MHC) have converted we will know pretty soon (this week). Assuming they all (not just MHC) don't they still hold effectively 375m C/N's (1 C/N = 1 share) against a possible 506m ordinary shares (so 42.6%). If they all convert and take up their entitlements we see a further 93.8m shares offered which could raise a further $9.38m. That would mean noteholders (including MHC, Bizzell, NM) would control 48.1%. Ding Ding Ding lets get ready to rumble. The next few weeks will be interesting !!

In relation to the $10m raise and the $8.6m left at 31/12/18, I see your point but that is not taking into account the timing of the $15.77m of revenue from Kincora and when they need to pay accounts. I think it is wise and also means they are not intending to draw any further C/N's. (just the Tribeca facility). Maybe a bit of insurance against a possible early redemption notice of the MHC notes costing $15.5m.

We could have 975m shares on issue by the end of August and a further $9m in the bank by 31/12/18 if all the Noteholders play ball.

* Please note these are my thoughts and opinions only and should not be regarded as advice by anyone. The numbers mentioned above are approx. only, refer to the PDS for exact numbers. cheers Killa.