Rationale for underwriting and sub-underwriting arrangements...

Rationale for underwriting and sub-underwriting arrangements

Rationale for underwriting and sub-underwriting arrangements
The Company considered all reasonably available options to it to mitigate the potential control effects of the underwriting and the sub-underwriting (for example considering whether a number of separate underwriters or sub-underwriters could be appointed in respect of the Offer or whether the Offer could be renounceable). However, the underwriting and sub-underwriting arrangements summarised above and the Offer as structured were, in the Board’s opinion, the most practical and suitable arrangements for the Company to enter.

The Board also considered alternative methods of raising funds including private placements (which would have a greater dilutionary effect on existing Shareholders) and debt funding (which, given the Company’s existing debt position, was not available on commercially acceptable terms), however the Board decided that the Offer was the preferred form of capital raising as it provides the most certain outcome for the Company in the present circumstances and is preferable because it allows existing Shareholders the opportunity to participate in the funding of the Company at the substantial discount represented by the issue price which the Company has offered to attract sufficient funding. The Board also set the issue price of the Offer at an attractive discount to the market price of the Company’s Shares to encourage Shareholders to take up their entitlement and thereby reduce shortfall under the Offer and the likelihood of control becoming concentrated with ISSAR or Komodo.

I CANNOT THINK OF ANY REASON WHY ANY SHAREHOLDERS WOULD PARTICIPATE IN THIS ISSUE

RB