Ann: Admedus launches rights issue, page-70

Hey Paul - any idea why the $5m has been called in? I was under the impression that it was a conventional loan from SB that could be paid off over time. Not sure why it has to be paid back as a lump sum suddenly.

Today is giving me serious deja vu. No one will participate in a CR if the SP is below the CR offer price, obviously. Pretty much exactly what went wrong with the previous CR. What Paterson et al don't seem to grasp is that offering shares at a discount only works if people believe that your company has a net intrinsic value. They have to believe that you're offering them a bargain. Otherwise all that happens is your SP crashes to slightly below the offer price - if the CR had been offered at an 80% discount, we would have dropped by 81% today.

With poor management and negative cashflow, the business has no intrinsic value. How does one discount zero? It's not possible.

I believe what happened here is that WP counted his proverbial chickens and took that original $10m loan in the belief that it would see AHZ through to positive cashflow. The eggs never hatched, for whatever reason, and the loan was called in, so he suddenly found himself very far up a certain creek without his floaty wings. So he tried to nonchalantly do a CR in the hope of raising enough to repay the loan and get the company through to positive cashflow - I believe at this point he knowingly lied about the upcoming 4C figures and the real reason for the CR in the belief that a 'little white lie' would ultimately save the company and that he'd be forgiven. But he radically overestimated everyone's appetite for his particular brand of horse$hit, the CR failed dismally, and AHZ suddenly found itself stone cold broke. Everything that's happened since then, with Star Bright etc., has been a last ditch effort to keep the lights on. From the moment that the last CR failed, this has been a tooth and nails scrap for survival. In a nutshell, this all happened because one man got high on his own supply and took out an expensive loan in the name of a company that wasn't making any money. Even his most ardent supporters would have to agree that this was a rookie mistake.

If only we'd been happy with baby steps.

Oh well.