where to from here

Today's announcement is perhaps not unexpected. FFF appeared to have a stategy to build its loan portfolio to sufficient bulk to make itself attractive to a suitor.

It has achieved that.

If the proposal as set out today proceeds as outlined, then we will have the following shares on issue (approx. figures) -

773,900,000 current outstanding shares
1,428,000,000 (placement of $50M @ 3.5c each)
619,000,000 (rights issue - $6.19M @ 1c - 4 for 5 basis)

a total of 2,820,900,000 shares. With that many shares on issue a consolidation down the track could be expected.

There are some questions raised by the announcement.

How long is the Exclusivity Period granted to AC&E Capital? Have the the current major shareholders and Directors committed to participate in the Rights Issue?

Tony Wales (director) controls around 16% of the current shares on issue. If he takes up his full Rights entitlement his holding will still be diluted to around 8% - if he doesn't participate his holding will be diluted to approx. 4%.

AC&E Capital is stated as a private investor consortium. Are any of the current directors investing in AC&E as part of this proposal?

AC&E will end up with just over 50% of FFF and thereby control of the company.

What is the longer term intention of AC&E as regards FFF?

Can we expect that a new CEO will not be appointed until something firm regarding the AC&E proposal?

As well as some unanswered questions there are of course some positives.

- If AC&E commits $50M it will be looking for a return on its investment. Change can be expected.
- AC&E can be expected to aggresively manage FFF with the key objectives of improved profitability and raising the appeal of FFF in the broader market.
- If profitability is improved then this can be expected to propel the share price
- If the funds raised are used to clear or substantially repay current borrowings this should add $3M or more annually to the bottom line.
- AC&E would presumeably have done considerable analysis of FFF prior to signing the Heads of Agreement, and must see value and potential.
- A new face often sees different opportunities and also what may be sacred to current management may not be the case for AC&E. Personnel changes can be expected and streamlined management structures implemented.

Interesting times.

This is just me sharing my thoughts and observations. DYOR - don't rely on my ramblings for your investment decisions.

Have owned FFF in the past but no current holding.