August 19 insto presentations, page-86

Please don't be abusive (i.e "a load of verbal diarrhoea") on a respectful level your rationale appears to be "When raising large amounts of money everyone involved looks for certainty is achieving that objective and a mix of existing shareholders and new institutions is required". I have no objection to having some "certainty" in a Capital Raising. For example SAR raised A$796m (on 18 Nov 2019) to finance their superpit acquisition as A$369m in a placement and A$427m in a Rights Issue - to me this provided "certainty" and was "fair" - if they had an under subscription on the RI then they would likely have been able to borrow the difference (they also got a facility of $500m to fund the acquisition).

In this instance the capital required was just $55m and the split was $40m to institutional investors (as a placement) and $15m to a Rights Issue (to all shareholders) all at 23c/share. The OBM presentation of 28 & 29 April 2020 shows the split of shareholders on their register as:

This shows institutional shareholders (including Hawke Point) represent 62.5% of the register (i.e 45.2%+17.3%). To be fair to all shareholders my position is that a capital raising should be representative of the register however the CR allocated $40m cheap shares to just 62.5% and the remaining $15m to all shareholders (including the former 62.5%) which was an allocation of an additional $9.375m (out of $15M) to institutional shareholders. Consequently $5.625m (i.e 10.22%) was (at the end of April) on offer to non institutional shareholders (including Hawke Point) who at the end of April represent 37.5% of the register.

The OBM announcement of 29 July said that by the date for closure of the rights issue (7 July) the sum available to retail shareholders was $3.3m which would imply that at 7 July retail shareholders represented 22% of the register (down from 28.3% at the end of April) - the implication is that institutional shareholders were buying from non-institutional shareholders during the end of April to 7 July period. So at 7 July $51.7m (i.e $55m less $3.3m) was available to non institutional shareholders who represented 78% of the register. Only $3.3m (i.e 6%) was avialable to the 22% of the register representing retail investors. As it turned (announcement of 29 July) out $7.4m of offers were made for the $3.3m available and that after rights were granted (at 9:1) only $0.9m shortfall was available for $5m bid (by retial shareholders) resulting in scale back of 82% of the shortfall over subscription (i.e 21,548,910 application to 3,906,962 available) - the scale back was on a pro-rata to shareholdings (i.e entitlements) on the record date (7 July) and not offers. My interpretation is that institutional shareholders (including Hawke point and directors) had their fill but retail shareholders (representing 22% of the register) only got 6% of the capital raising - my question "is this fair?".