Ok, this is really good news that you can see the Supplementary Prospectus.
Why? Because this means that ASIC have reviewed it, and are satisfied that the Supplementary Prospectus / Annual Report satisfies their queries.
We can now move forward, and it is unlikely that the timeline for the capital raise will be extended beyond the 20th Dec (for the Entitlement Offer).
As I mentioned before, I have read the Supp. Prospectus.
These are my notable notes / thoughts:
Section 3.3 Chairman's Letter
This is the same as before,except for the following section which was added:
It looks like Meir needed to clearly explain how the business objectives may change, depending on how successful the capital raise was.
Section 3.5 ShortFall Offer
This section goes into more detail about the shortfall offer.
The shortfall offer is timebound to 3 months (of course it could close early if fully subscribed), and also covers who is eligible.
As I understand, only professional investors will be eligible, and although not stated here, the participants do not need to be existing shareholders.
3.6 ASX ListingI think this is pretty standard stuff, however, I did notice this point:
Feel free to correct me if I am wrong, but they have received applications up to 87M shares (approx. 435K) under the original prospectus.
Not a bad start given the hiccups we have had.
Hopefully more applications can follow now - although I would expect the Entitlement Offer will not be fully subscribed, which then the remainder will fall under the ShortFall offer.
3.7 Use of FundsPoints 3 and 5 now have a breakdown of the costs, which adds more transparency.
3.8 Pro-Forma Balance SheetThis section covers KPMG's assessment of $118M worth of obligations under existing supplier contracts, which was the basis of KPMG's conclusion of "other than going concern" (in other words, their assessment that SAS will not survive).
Their concern was that if we could not meet our obligations, we would need to pay $118M because of severed contracts.
Remember that KPMG have made this assessment on the assumption that the capital raise will be unsuccessful.
These concerns were also outlined in the audited Annual Report.
Despite this, KPMG acknowledged the 4 points below (a), (b), (c), and (d) would allow the Company to essentially survive (i.e., "going concern").
Ok KPMG, you have had your say, now it's MY TURN!!!This same section basically has the perspective of the Company, in response to KPMG's assessment.
BTW, I was spot on with my assessment of KPMG, which did not take into consideration that contracts can be negotiated
in good faith.
Section 3.10 Information Regarding Calculation of Offer PriceI think this point is important to note:
External investors = professional investors (think "soft book" of professional investors).
There would be some commitments to participate in the shortfall, and the commitment would have been based on a 0.005 price.
With the previous failed CR at 0.01, there was no commitment, and so it did not succeed as we all know.
3.1.2 Interest of DirectorsThe directors have not specified how much they intend to take up.
Consider Meir's holdings:
Shares = 325M
For Meir to fully participate in the 1:1 offer, he would need $1.625M AUD.
He may not have the financial capacity to take up his full entitlement, as this is a lot of money.
Just keep that in mind, before you criticise the directors for their participation (or lack of).
My Conclusion- The fact that you can read the Supp. Prospectus means that ASIC are satisfied with their queries.
- Expect the ASIC stop order to be lifted.
- The Company (SAS) has responded to KPMG's assessment of "other than going-concern", and as I expected, it is unrealistic because SAS has (and will continue to) negotiate contracts in good faith.
- I would not expect the Entitlement Offer to be extended beyond 20th Dec (the new closing date).
- There is a high degree of confidence (according to the company / Merchant) that any shortfall will be taken up by professional investors.
p.s., changing my sentiment to Buy.
GLTAH
