When the last Capital Raising (CR) was announced the share price was 2c and shareholders were told the company was looking to raise $1m but were not told at what price and so only a few existing shareholders participated. However the company without the knowledge of the majority of existing shareholders organized for Pattersons to do a private placement and these investors were aware of the price at 1.1c. The company raised $3.75m. The CR was suspicious and reported to ASIC who investigated and Chris Rodgers (Chairman's son) purchase of 6million shares was disallowed . The board then organized to support his purchase and so it went through.
At the time on this forum there were calls for the board's resignation but they were ignored.
So he has approached this CR in a similar fashion but slightly differently. The aim is the same and that is to allow family and associates of the 2 board members to acquire a large parcel of shares at a discounted price. To do this the company has announced a non renounceable 5 for 2 rights issue at .4 c raising a maximum of $10.4m and another 2.5 BILLION shares ...quite unbelievable and massively diluting. The shares are currently in suspension and at .9cents.
Now if you own 1 million shares, you are up for $10,000 and so on and so very few existing shareholders will fully participate just like last time. Also it must be noted that in the last 6 months the company has spent recklessly ( about $16m in 6 months) even though the auditor has acknowledged the debt of $2.5m hanging over the company and it appears the company did not make provision for this debt and now we are in suspension and faced with an incredible CR even though the debt was only around $2.5m.The company claim now they want to clear all debts which is all very strange as why would you not keep carrying debt like you have previously done rather than massively diluting your shareholders.
I my humble opinion the board have no intention of raising the amount announced just like the last CR and also just like the last CR they know that few shareholders will fully participate as again they have made the CR as unattractive to existing shareholders as possible.
If the Rodgers family (100 million shares) and Gandel (500 million shares) fully participate to that level and other existing small and medium shareholders do not, then the families will now own a much larger PERCENTAGE of the company. Of course the board will be so grateful to them for their participation and thank them and then pass a motion to allow it like last time. Many of us have wondered how the families are going to privatise the company and I think this is how.
In my humble opinion 2.5 billion shares will not be raised because of non participation of smaller shareholders but the board's families and associates will and that is how they will acquire the company at a very cheap price and own a much larger percentage in the process.
The question that has to be asked is why would a company raise so much money at such a low price and cause such massive dilution if there was not another agenda.
You may think that you will avoid dilution if you fully participate but unless smaller shareholders do as well, the major shareholders as they own so many shares will suddenly own such a large percentage which will be their move toward taking control and you may find this purchase is useless in the future as they move towards privatisation
CTL Price at posting:
0.9¢ Sentiment: None Disclosure: Held
