Ann: Net Tangible Asset Backing - 06 March 2015, page-23

I’m not a HHV holder but I am A HHL holder. As a rule I really dislike Share Placements, but I think there is some redeeming points about this one that haven’t been mentioned.

The dilution for the share placement only is just a tad over 2%. The rights issue dilution really doesn’t matter because owners wear both the dilution and the purchase discount and the money may not even be raised given current market price.

Was anything gained for that 2%? Yes – the optionality that cash available for investment brings

As it’s structured the rights part of the raising gave shareholders the right but not obligation to participate prior to the SIRFLOX release but not having to act until after. How many of the current shareholders would have been happy to have been forced into making the decision to increase their investment prior to the SIRFLOX announcement?

The Share placement participants had to make the decision prior to the SIRFLOX announcement – the discount they required for that near term risk resulted in a price of $1.26 – was it fair? That’s subjective, but it didn’t work out particularly well for them in the short run. The important question is will HHV uses the cash well. It will be interesting to see if they are buying SRX after the fall with their cash pile – it does seems the sort of play that Peter Hall would make.