$669 billion, page-10

Hi Intel01,

No offence taken. I do however suspect there is some divergence between my line of thinking and what is being discussed. Maybe a little misunderstanding so I'll try and clear it up.

None of the thoughts expressed in my posts are or were meant to express the idea that there is a plot to kill of MST or its tech. Rather my concern is purely about change in ownership of MST and the disenfranchisement of holders of their equity. It’s my belief that MST will survive but the equity holders that funded much of the development to date may well get next to nothing by way of return on that equity.

Let’s face it, MST is like a wounded fish, flapping about and everybody can see its highly exposed and vulnerable. In its current state its easy prey to be gobbled up without much of a fight. The question is why hasn't it been ? With its world beating tech now advanced to the point that can be sold, surely it’s a tasty meal for some hungry bigger fish right. But here we are with nobody wanting to buy our company.

It seems to me that the other big defence companies aren't that convinced that MST is actually on the cusp of taking any market share from them or they would snap up MST real quick while its dirt cheap, but hold that thought. What if MST does find some support from a defence department such as those that worship the maple leaf, they surely would want a foot in the door just in case right ? It’s just hedging your bets.

There is a trade off. How do you get maximum exposure to the upside if MST does management to pull off a deal without having to fund the $20mil in debt and pay the significant ongoing development costs until something happens, maybe ?

The solution to getting a bargain in difficult times is usually quite simple. Hold off until the seller is in real distress then dangle a rope in their general vicinity. When they are convinced it’s a lifeline and start to go for it then drag it slightly further away. Make them give in a little, then a little more again. Once they are committed to pursuing what they think you are offering then by default they forgo most other options and end up completely at your mercy.

Any of this sounding familiar yet ?

This party, via Springtree in disguise, have dangled a rope to make MST management and holders believe that they are being rescued. This helped convince holders to cough up another couple of million in cash (about 20% of the current market cap). We call this milking the cow. It now appears that they have pulled the rope away and make MST management and holders chase it in desperation.

At this point ASOF (or whoever it really is behind them) want and need holders to agree to changing the terms for converting their dept (which no doubt they only paid a few cents in the dollar for) into equity. This step is critical as only at this point do they gain control. They don't actually intend to convert it into equity now, but rather hold the right to do so on much more favourable terms than the notes had when they agreed to buy them. Why convert them now when its easy to see the SP fall to 0.001. Wouldn't take much to get it there from 0.002 would it ? Just a little nudge.

When the SP is at its most favourable point ASOF would have the right to convert to equity and hold between half and three quarters of the company. And what did this cost them ? A few cents in the dollar for the debt and a relatively small amount of cash. Exactly how much seems extraordinarily hard to determine.

The end result is that they get majority control of a company for next to nothing. Not only did they pay only a fraction of what it was worth but in doing so the value of the company actually increased dramatically. The $20mil in debt magically disappears and shareholders who are largely being wiped out even agreed to add a large amount of cash into the coffers right before the mother of all dilutions. Yep, these guys aren't stupid.

But if you think the game ends there then you may be surprised. Once your committed they can dangle this rope and move it closer to their end game as many times as they like. Each time they receive less resistance. Majority control has its privileges.

The current spat is probably just to hold off on meeting any of their commitments and make holders desperate enough to agree to the change in the terms of the notes. At that point MST and its holders are past the point of no return and the rope can be pulled further away and there is not a damned thing that MST or its holders can do about it. Certainly seems a big coincidence that they raise this dispute at exactly the time the voting papers for this notes change is being mailed. Besides, the SP needs to fall one last time and some extra drama might just get the VWAP to the right level in time for the vote. Why do these things always happen to MST ?

The above is pretty much from the basic play book and probably what I would do if I wanted to control a company in MSTs position. These guys are no doubt more experienced and much smarter than I so they probably have a few more tricks up their sleeves. Don’t expect that management are equipped to counter this either. Given the Philippines fiasco we know they don’t see they have a tendency to get sucked in. Not being critical but it is what it is. Desperation makes one want to believe. Look at the number of people that get sucked into online dating scams as an example of what people will overlook when they need to believe.

I hear conspiracy theories all the time on loads of stocks. I laugh at most of them so can’t blame you guys for doing the same at my ramblings. I really want to be wrong about all of this. I have some equity and many millions of options in this company so I’m not wanting to talk it down. Can’t get any real value in selling so like most all I can do is discuss the likely outcomes with you guys. Sorry if I’m a bit of a wet blanket.