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Ann: Share Sale Agreement with gridGomm, page-250

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jazzmox

8,619 Posts.

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20/03/16

08:20

Post #: 17320449
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Originally posted by The Wild Man ↑

Okay.... let me first state that I am no expert in this stuff. However I am very logic-driven. Having said that, the following calculations are 100% based on Serena (the original poster) knowing HER stuff. All I have done is taken her format and her calculations (based on a ODN SP of .020) and substituted new figures (based on ODN SP of 0.050).

I've done this simply to investigate the effect on overall ownership of the new entity if the current SP were to rise in the next short time to 5 cents prior to consolidation.

NB: Everything between the horizontal lines is taken directly from Serena's post (above) and only the bold parts
are altered.
________________________________________
Current number of shares issued is 562 million

Expected consolidation share price as per ODN announcement is $0.100

Let us assume that the share price before consolidation is $0.050. In this case, the consolidation ratio would be 2 to 1 in order to achieve share price post consolidation at $0.100

Current number of shares issued after consolidation is 281 million (i.e. 562 million/2)
gridComm's owners will be issued 169 million shares post consolidation (excluding three tranches of 87.5 million performance shares which could be exercised within 5 years after satisfying performance criteria)

Based on the above scenario, the number of shares issued post consolidation is 450 million (excluding those performance shares).

CR for the amount of $4 million at $0.100 (consolidation price). The number of new shares to be issued to the applicants (if fully subscribed) is 40 million (i.e. 4 million/0.100).

Total number of shares issued after CR is 490 million (i.e.450 million + 40 million)

The number of shares owned by gridComm (excluding performance shares) is 169 million. Estimated equity ownership of ex gridcomm's owners in ODN based on the consolidation ratio 2 to 1 = 169 million/490 million x 100% = 34.5 per cent.
__________________________________________

Now working on this basis, IF the SP rose to $0.05 by consolidation time (and the subsequent consolidation ratio was then stated as 2 to 1 in order to arrive at the targeted post-consolidation $0.10 SP) then Gridcomm owners would no longer have a majority share-holding in the company. ie they would own 34.5%.

This is because the technical value of the entity they are joining (being a function of the SP) will be higher. Their pre-determined 169 million x $0.10 shares represents a lesser percentage of the joined entity (34.5% rather than 52.6%).

Seems to me that Alex has basically assured that the value of OUR shares in this will be better maintained and protected IF WE DECIDE the SP should be higher and back that opinion with our cash.

Gridcomm shareholders aren't, in this example - and possibly in actuality as well, (though this is for others who know what they are talking about in these matters to substantiate, not me) actually getting a set % of the combined entity. What they are getting is basically a set amount of CASH (by way of 169 million shares at a set price - due to the set consolidation to $0.10). Whether that set amount of cash (in the form of shares) is a majority or minority shareholding is up to you and I.

I'm NOT puting this forward as indisputable fact, because as I said, I'm no expert in this. I'm simply puting it forward as a logical extension of the work of someone who seems to be an expert (relative to me anyway). All I've done is put forward new figures and ground out new totals.

If I'm wrong I'm wrong, but it seems to me that this proves it is in ODN shareholder's interest for the SP to rise PRE-consolidation.

Pick my logic apart all you like but that's how I see it.

Expand

I am not sure it matters to Gridcomm. ODN will become Gridcomm and old management will step aside and Gridcomm management will take over.

They get a set number of shares and performance shares. Not sure why percentage ownership matters.
If the share price goes to $2 within 12 months their 170m shares will be worth $340 million excluding performance shares.
Monetary value is really all that matters. Percentages only matter if you are talking about voting. ODN will seize to exist and Gridcomm will steer the ship.

For current and near term ODN holders it's good for the sp to rise as consolidation will be minimal. For potential large buyers, i.e. funds, they can take advantage of the liquidity as it may be difficult to get allocation post re-listing unless they are lucky enough to be part of the $4m raising.

So in summary all that matters is monetary value and not percentages.

ODN Price at posting: 1.7¢ Sentiment: Hold Disclosure: Held
3 Upvote

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