Greatcell Rescue, page-38

Dear Maca

Welcome back to the forum.

In the Onergy DOCA it seems that 80% ofshares are reserved for the promoters, whereas in the Otsana proposal onlybetween 12% and 26% are reserved exclusively for the promoters. In the Otsana proposalthere is one tranche of shares (150,000,000) reserved for professionalinvestors (between 14.8% and 31.7%) and the general placement tranche ofbetween 160,000,000 and 700,000,000 shares (between 33.8% and 69%), that willbe available for existing shareholders to average down their price. Retainingan entity for the benefit of all shareholders has been a key cornerstone of ourefforts. This seems to me to be a deal that places the company in the hands ofthe multitude of shareholders not in the hands of the promoters. Thisindicative guide represents the baseline for the restructured company and theshare prices mentioned are minimums. Once the creditors have voted, a comprehensive document and proposal will be made to shareholders, including, we propose, options.
The GSL Rescue Group (Peter Richards, Tom Fontaine, Sylvia Tulloch, Gavin Tulloch) have provided the necessary funds to keep GSL from liquidation after the Board put it in Administration on 10 December. Caldwell and Onergy did not.

I bring to yourattention the matter of credibility. The Rescue Team searched for appropriatepartners to ensure that our offer would provide maximum security to theAdministrator that the deal would be completed. We found and entered into asyndicate with Otsana based on their experience and the fact that they havecompleted about 15 such reconstructions in the past 2 years. Onergy is a singlepurpose entity created by the principals to do this deal. It has no history offund raising. Neither has New Moonie, controlledby the same personnel as Onergy, in its fund raising effortsfor Greatcell.

I note thatthe Administrators formed the preliminary view that the company, under theleadership of Mr Caldwell, may have been in insolvent trading since January2018. None of the proposed investment entities announced by the company during the subsequent period up to Administration were completed. As stated above, this included New Moonie, , which, as the Administrator states, “in early December2018, New Moonie advised that due to uncertainty surrounding its own financialposition, the proposed future substantial investment in the Companies could notbe assured”.

I refer you to thecomments by the Administrator in the Second Report:

‘we have concerns asto Onergy’s capacity to complete the transaction.’ ……

Therefore,absent evidence that satisfies us of Onergy’s capacity to complete thetransaction, we

recommendcreditors approve the Otsana DOCA proposal which is projected to provide animproved return to creditors of GSL and GSI, as compared to Liquidation of allentities.It seems that when evaluating the two bids, we may not be comparing apples with apples.

Withrespect to contracts with the Australian Government, it is typical in governmentcontracts for there to be automatic termination options (which are usually enacted)when a grant recipient company is put into Administration. The Administrator reports that ARENA have terminated the Contract with GSL. AusIndustry has made a claim for $1.9M for apparent failure to fulfil the CRC project contractual responsibilities.

You would be saddened to witness the state of relative abandonment of the facilities in Queanbeyan, a consequential result of the sudden ceasing of operations when Administration was initiated. Maybe the directors should be required to explain how they allowed this to happen to a company that was just 2 years ago the industrial leader in this technology.

We have a plan for the future that is achievable, not a ‘yellow brick road’ and not dependent on the 'Wizard of Oz'. Once we get through the current phase of maximising returns to creditors, we will inform shareholders of our plans to bring products to the market within 2 years, and how they can share in the forecast future success of the business.

Our syndicate has the credibility and we are here to do business for the benefit of all parties.