Ann: Capital Raising , page-9

I think some perspective is needed on the capital raising.

Firstly in terms of price.

The share price has performed spectacularly well since release of H1 FY11 results. In fact surely the rapid expansion in such a short period of time, exceeded even the most optimistic expectations. This is against a backdrop of what has been a pretty negative general market. The index is back to 3 month lows I think. Capital raisings take time. Particularly for a company with a profile like VOC (which is still a small cap with only a limited track record). Even a rapid capital raising will take a few days. Most raising will use a VWAP method for determining price which of course is based on previous trading performance. I have no doubt that at the time it was calculated management had a ligitimate basis for beleiving they were achieving a good price for the company and sharholders. The fact the market moved from around the cap raise price to a high of 2.90 over the course of a handful of subsequent trading days was most likely not considered a likely possibility for most if not all interested stakeholders. If it was most investors now complaining would have loaded up at $2!!!! On top of all of this we need to remember that executive directors and management still hold a substantial proportion of the issued capital so it is at odds with their own self interest to unduly dilute through a cheap capital raising.
Sure the price is unfortunate but I dont think there is any real basis to be upset about it.

Secondly in terms of participants. I think the decision in terms of those offered to participate in the raising (i.e. predominantly instos) speaks volumes about the use of funds. The raising has been done quickly and been fully taken up by insto and professional investors. Surely that means a relatively large deal that needed to be executed quickly is going to be announced shortly. It would have been nice to get a bigger slice of the pie, however a retail raising is always going to take longer, than an institutional raising. If that is the case and management has identified a good project that is going to generate R.O.E of anything over 20% then I really dont mind that the raising was only offered to institutional buyers as ultimately its going to lead to a further increase in value for shareholders.

Even if there isnt a major deal in the offering and management thought the current price represented a good opportunity to raise capital then its still all good. See my comments above on price, I dont think the recent performance could have been reasonably expected so no qualms on that front. Further ultimately I have some confidence the funds will be allocated to promising projects in the future so the fact the company has those funds at its disposal to take advantage of opportunities as they arise it can only be a good thing.

I suppose we will find out shortly as to use of funds and whether a large deal is set to be announced shortly.

I think there is a possibility the price may consolidate at current levels as there is always a possibility some of the instos make seek to take some short term profits to bolster performance numbers against no doubt poorly performing other investments given general market performance. I stil think buys at around 2.4 probably represent long term value. Then again most instos will probably offload only a few if any and any sells are likely to be soaked up by general market demand. As ive said its pretty hard to second guess share price performance for VOC.

Thats my two cents!