Ann: Capital Raising , page-18

A couple of points.

Optionholders aren't shareholders - they buy or are given an option to become a shareholder - at a given date for x amount. They aren't shareholders and can't be loyal shareholders.

Based on option terms which are fixed and everybody knows, the option are valued and constantly traded. How can it then be "fair" to change the terms at some arbitrary point. Is it fair to any optionholders who have just sold out? Is it fair to ord shareholders who valued and purchased their ord shares based on shares on issue, EPS info and likely option conversion numbers?

Option holders may narrowly rationise this as being fair because they recoup some losses. When you look at the whole picture, it clearly isn't. There is no free lunch. Extra value isn't magically created by changing option terms. What happens is that value is taken from ordinary shareholders whose holdings suffer reduced asset backing and profitability per share. They'd be none to thrilled especially if they paid 20c for their holdings. I'd imagine FAS ord shareholders must be fuming.

So it isn't fair to alter fixed option terms part way though, as you're just favouring one group at the expense of other. Agree directors look after themselves, but that's a separate issue to any fairness reason being promoted.