Ann: Conversion of Redeemable Convertible Preference Shares, page-83

Hi IJ, good post.

I don't blame the board at all for doing the deal on the terms they did. I agree it was the only way to get it done at the time. I accepted we would likely be fully diluted at that time. And if the coal price was still $130 pt I wouldn't be grumpy at all. But the truth is the board and us has got lucky and it's $200 pt. Coking coal has spiked and they got the asset for $8mil less due to 2 months profit. So they didn't need to convert all the RCPS to settle. That they have converted early and diluted by 30% for what appears to be 3 months free cashflow I just can't get my head around. I really hope there is more to it, but I'm struggling. Of course it is 'safer' for the board to just convert and kill off the debt, but from a shareholders and EPS perspective it really is snatching defeat from the jaws of victory. I'm sure in their heads the strategy was always going to be to convert, but if they were thinking on their feat they could have got a better outcome for the majority of shareholders by doing a raising- except of course the ones who held RCPS. Who are they again? Oh right, the same blokes making the decision

I know some people invest on charts and momentum ect, all good, but I invest like private business on valuation and regarless of the way the deal was originally intended to go down, these instruments were redeemable. So that's a fresh choice and I just lost 30% of my share of Escarpment by the stroke of a pen I think could have stayed in the pencil case. I can't be happy about that.

I'm not trying to talk the company down, I agree with you we're worth materially more, and I am so heavily invested here it's not funny. If coking coal price stays strong the weight of cash will take us to where we hope it's worth not the board. This is a cyclical company and we are a price taker let's not forget that.

But I do think I have the right to hold the board to account both for their good decisions of 12 months ago, but also the one they made this week. Because even if there is a sound strategic reason they have done a horrible job explaining it. And to get our market cap where we want it, we need the broader institutional market to trust us, not just 2 Singaporean hedge funds as if they wanted to take it over they would have done it already in weakness.

I'm looking forward to a candid update from the company about where to from here. I wrote to them Thursday evening but haven't even had an acknowledgement they recieved my email. I'm guessing they got a few though.