Ann: Acquisition of Enoro and $50m equity raising, page-37

In my mind the best way to look at the fairness of the placement and SPP is to consider what would have eventuated had a pro-rate rights issue been undertaken.

About 13.5m new shares will be issued @$3.70 to raise $50m, HSN currently have 182m shares on issue. That means a rights issue of 13.5 shares for every share held would need to have been instituted to raise the $50m under a hypothetical rights issue.

If a shareholder takes up the full $5000 entitlement under the SPP (assuming no scale back), that means a shareholder will end up with about 1350 new shares.

Hence the key shareholding number here is about 18,000 shares. If 18,000 shares is your current holding and there was a 13.5 for 1 rights issue, you would be entitled to about 1350 new shares (ie. exactly what you will get under the $5000 SPP entitlement)!

Those who hold above 18,000 shares are being diluted, those who hold below 18,000 will proportionally increase their holding - assuming a full SPP allocation.

However, since the company has just announced a weaker than expected 2H2017 which has slightly missed consensus forecasts, and considering the Enoro acquisition cost is a pretty generous 10.5 x EBITDA, we might all the get another chance to buy on-market at around the $3.70 mark. Let's also not forget that the share price has been below $3.70 for almost all of this year as an opportunity to top-up for those with conviction about the company.