Is 21.5 cents the lowest under SPP?, page-35

JB, lets try and keep this concise (difficult). Your first and last question:

"But I'm asking does the reference to Listing rule 7.2 Exemption 5 have the effect of making the lowest possible price 21.5 cents because that is 80% of the issue announcement date price rounded to the nearest half cent."

No, IMO. Most easily indicated by the the simple plain English of the SPP, the price can clearly be under $0.215 from the original SPP offer itself (or why say it could be lower on the second proviso):


However, as you point out yourself, that last rule about it not being lower than 80% of the 5 day VWAP before the date the issue was announced. Like many aspects of (securities) law its purposely a little vague to allow wiggle room. You could ask two different legal experts and get two different answers, so I respect your questioning of it (KPMG cocked a tax/legal issue up for me years ago, that I struggled with for a year, eventually being proven right)

You flag the Insto issue announcement date, but arguably there are two floors, 80% of 5 day VWAP both "before the issue date was announced and "when the issue was made"



So when the issue was 'announced' and when it will be 'made' is key.

Wrongly or rightly, many will interpret the announced issue date for the SPP formally being 19 April when the actual SPP booklet was released. REdo your VWAP workings on that basis. Very loosely, lets theoretically say $0.215 looking at the prices (not accurate, just a rough figure), then the price limited to $0.172.

Possibly why the price jumped yesterday? Perhaps your questions did make a few rethink (a useful exercise if that true). As others point out above, you also have to add the value of the call options. Most use a Black and Scholes based model....combining that and my theoretical premis, that would put the issue price floor slightly above the closing price.

(This is not financial or legal advice.....blah, blah, blah....which in Australia is often pretty crap professionally anyway, even if you do pay handsomely for it)