Ann: Request from members to hold a general meeti, page-19

re: Ann: Request from members to hold a gener... Thanks for those two posts daleg. They are both excellent in detail and your points for not being happy are really well put. I have plenty of knowledge in this area as well, but not to that level. (I wish other strings could have a decent debate like this...)

By your reckoning (which I think is correct) they will be seeking to utilise the losses, therefore the only issue left for debate between us is your comment as follows:

"Now my reading of this is all they are doing is giving us the great pleasure of investing with them , taking our loses and structure for free and at the same time delaying our capital return. I do not see that as a fair deal.

I reiterate my view in that returning the capital first would be more appropriate . We will not be held to ransom while this is sorted out. It makes we wonder how confident they actually are in raising the capital."

My views are as follows:

1. They have the capital lined up already. it's getting the votes to make it happen and also putting up a reasonable proposal as well.
2. You are correct to say they are going to use the losses, but they are not taking them from us if we are already holders. The alternative of simply winding up the entity and flagging the losses away I don't like very much.
3. Am I then correct in assuming that your main point (which is a fair one) is that you want a premium to NAV for this if you are to support this. The crude value of the losses (being the company tax rate x the losses) would be 30% x $80M = $24M. My understanding is that these losses are worth 50 cents on the dollar when they are 'for sale' as they effectively are in this situation. Therefore I would ascribe a present value $12M to the losses (if my $80M figure is correct).
4. There are 175M units on issue, so I believe your point to be made is that the $12M of losses are worth 6.9 cents per unit. You are correctly pointing out they are trying to take away our tax benefits for free. That is assuming of course the new people enter in at NAV of 16.7 cents. Of course the proposers will say that the losses are worth nothing at all unless someone else comes along and tries to use them, and they do have a general point there, but your argument I think is much stronger.

Let's be generous (just for now) and say that for the effort and uncertainty of making money over many years and the length of time taken to utilise the losses, I would say at the very worst be worth 5 cents per unit right now. That will be an interesting debate to have with them.

Therefore I have some questions for you for us to further debate.

1. If the existing unitholders (ie us) roll over at 16.7 cents NAV into the new entity, would your concerns be assuaged if the new fresh players in the recap were to come in at a premium of (say) 20 cents total per new unit for the fresh capital coming in. I am beginning to think some sort of premium may need to be offered for existing MXQ holders to agree to the deal. I am coming around to your way of thinking.
2. You will notice that most of the increase in the share trading is attributable to one individual who is now up to almost 10% and I think the whole thing could come down to whether he is a friendly or whether he is not (and now I must say I am not sure). If he wants a premium for the new people coming in, the proposers are going to have a job getting this across the line.
3. Of course, we need to see what the actual proposal itself is. They may indeed come with a premium. I imagine this will all come out prior to the meeting. I am prepared to cut my cloth according to what is proposed.

Anyway, great discussion and excellent contribution.

One thing I do find in these votes is that in my experience the existing original holders (those who are still left) will to a man vote these sorts of things down, mainly because they probably lost out in the GFC and do not care one jot for the people proposing this. I find that attitude short sighted but given how some people suffered at the hands of these people during the GFC, it not surprising. I am not sure what % of votes this would be, but in a close vote will make a difference.

I will definitely be voting when the time comes and definitely have enough to make a reasonable difference. I will try to attend the meeting as well.

Anyway, let's see what the proposal suggests.

Great discussion.