Ann: Reinstatement to Official Quotation , page-17

KB2,

Of course I know what underwriting is, the question is

Do you know the difference between a placement and pro-rata non-renounceable entitlement issue??

Please re-read the announcement, I will explain for you:

There are 3 components to this capital raising, refer ann 3/4/09.

1) “The initial placement of A$5.2 million that completed on 27 March 2009.”

This placement was made to “institutional professional and sophisticated investors of Euroz securities” refer to the 20/3/09 announcement, this placement was at 7c per share and has already completed on 27 March 2009.

2) “An additional placement at a price of 7 cents per share to raise A$5.1 million (Second Placement)”

This second placement will be made in two tranches. The first tranche of A$4.3 million will be placed to Santo and Molton. The second tranche of $A800,000 will be placed to Otto directors.

3) “A pro-rata non-renouncable entitlement issue (Revised Entitlement Issue) to raise a minimum of approximately A$21.2 million at a price of 5 cents per share, which will be underwritten to the extent of A$15.7 million.”

Underwriting

“Otto is pleased to advise that Euroz has entered into a new underwriting agreement in respect of the Revised Capital Raising (Underwriting Agreement) under which Euroz will underwrite up to A$15.7 million of the Revised Entitlement Issue. The Major Shareholders have confirmed their intention to take up their full entitlements under the Revised Entitlement Issue and to subunderwrite a portion of any shortfall up to a maximum investment of A$4.3 million each.”

So you see it is only the third component (Revised Entitlement Issue) which you have based your argument on, you have neglected the placement of shares at 7 cents per share to A$4.3 million under the second component.

So Molton and Santos will pay $4.3 million (please note ann does not say each so I will assume between) for shares at seven cents under component 2, the placement issue.
Please note this is not until 30 April general meeting.

They will then purchase their full entitlement of 3 new shares for every four held at 20 April under component 3, the Revised Entitlement Issue and sub-underwrite a portion of any shortfall up to a maximum investment of A$4.3 million each.

(Molton currently has 94,977,498, Santos holding not clear as must be within HSBC Custody holding)

That is as I said previously $4.3m (placement)+ $4.3m each (entitlement) = $12.9m total.

Now it is my turn to say to you:

“I would therefore ask you to retract you fallacious arguments” and “to read announcements PROPERLY before posting”

Talk about poor quality of counter arguments! Then again I can’t blame you – I probably gloss over announcements of companies I don’t hold too.