Ann: Completion of strategic review and business update, page-32

Interesting.

I do not think the liquidity an issue, they simply had to flag this as part of disclosure requirements whenever there is mismatch in expected cashflows, and I'm sure Swiss Re will delay the payment, Freedom is their partner after all and if the company goes bust no one will manage the 300,000 customers of theirs. I did not realise the up-front commission had to match the clawback commission to be cashflow positive, this is significant. The shows that they will continue to be generate negative EBITDA in next 12 months, this means they will not have ability to pay dividend and run down their books if St Andrews doesn't go through. Plan B is no more.

Secondly they hit with potential up to $4m in fines by ASIC, something that was only speculation but now confirmed. So that $18m minus $5m restructuring cost - $3m EBITDA loss - $4m fines is left with $6m in a worse case scenario basis. Current MC is about $6m, another 6 months with no development could see that $6m cash run down 50%. Now they need to stump up $10m in cash for the acquisition, even though net cash required is significantly lower the funding structure that was agreed by all parties is now in doubt. Furthermore, in light of the recent RC St Andrew's value will also be diminished substantially, so that $65m price tag should be much lower. This means they may need to renegotiate both funding structure and price tag, which means they may need to re-submit to APRA again. And APRA will not decide until ASIC make clear what penalties will be. All of this does not confirm a quick execution.

I'm out, this is the first net-net I've lost money on but lessons well learnt. I was wrong to assume no fines will be imposed by ASIC, St Andrews will be approved before end of this calendar year, and that this company will return to cashflow positive simply by servicing the TC, I just hope nobody was influenced by what I said. Good luck to all holding, as of now it is trading about 60% of cash per share (excluding potential ASIC fines), and the TC is considered completely worthless, so a positive announcement can significantly rally the share price, not to mention they can sell their Spectrum advisory division for probably at $5m to $8m. I'm simply impatient to wait any longer as the acquisition is now certain will not be closed by end of this year and running down their books no longer appear to be possible.