Ann: Corporate Restructure and Share Purchase Pla, page-34

re: Ann: Corporate Restructure and Share Purc... Here's my interpretation of the events leading to today's HAW announcement:

We all can sense that the relationship between both parties is strained (to say it mildly).

We can also assume that HAW's management did not come up this morning with the idea of SPP (Shareholder Participation Program) and that it was their last option after exhausting all other options.

I am certain that they tried to do a placement to Sophisticated Investors but were told by their advisers that they have buckley's chance of raising $5M in the current market and at a reasonable discount rate.

In my opinion, in today's market, for a company like HAW a minimum acceptable discount that a SI would accept would have to be 25%-30% which at the current SP of 1.1c-1.2c would bring the CR to a 0.7c-0.8c level, at best.

To raise $5M at this level would mean a massive dilution through issuance of another 666 million shares.

Not a good option, so the management had to come up with something better.

We all know that whenever any Co is doing a CR it's nearly always done to sophisticated investors.

This in turn upsets the shareholders who feel hard done by not being offered any allocation at the same price as the SI's.

(I won't go into detail in this post trying to explain why SI's get their allocation at a discount and why HAW shareholders were only offered $15,000 each as most of us know the reason's for it but if any newbies are reading this and need an explanation, please let me know).

So, not being able to do a placement to SI's the Co decided to soften the blow and approach their own shareholders. This alternative would work well by "minimising dilution" as the discount would be minimal at 1.0c and it would get the shareholders involved.

It would also in a way force the shareholders to take up their allocation knowing that if they don't, the Co will be in an even more trouble which would then be reflected in a much lower SP.

BUT...

I would assume that before going to their shareholders, HAW's management would have first approached LCY and given them an opportunity to buy 500M shares at 1c per share.

No doubt HAW's management would've assumed that LCY would just jump at this opportunity of acquiring another chunk of HAW at such low price.
If LCY did, it would've been the best possible scenario for HAW as it would have been much easier to do a placement to one party for the entire $5M then trying to do a placement to 333 shareholders at $15K each.

I would then assume that LCY (knowing how desperate HAW is) told HAW that they are not interested in their offer.

Why?
Because they know that it would take a miracle for HAW to raise $5M at 1c and even if they did, how long will $5M last them at their current burn rate?

So, the last and only choice for HAW was to approach their own shareholders.

I bet my bottom dollar that while HAW is working on their shareholders they will also be working on LCY, trying to persuade them (read begging) to take up a sizeable allocation.

Now let's remember that in 9 days time we will have NMDC on board as our largest shareholder and a co-decision maker.

So what do you think Indian's will say to HAW's request?

Thanks but no thanks.
Why pay 1c now when we will be able to pick up the rest of Mt Bevan in 2-3 mths time at 0.6c-0.7c (30%-40% cheaper).

Sorry, but that's "The law of the jungle".

From Wikipedia: "The Law of the Jungle" is an expression that means "every man for himself", "anything goes", "might makes right", "survival of the strongest", "survival of the fittest", "kill or be killed", "dog eat dog" and "eat or be eaten".

That's just my interpretation of the current events.

I could be wrong in here but I also could be right.

Anyway, good luck to all HAW share holders.