alk entitlement offer, page-2

It's not so much differential treatment of management, but rather differential treatment of the biggest current shareholder:


"companyinsight.net.au : Can you explain the involvement of Ian Gandel’s (Alkane non-Executive Director) companies in the underwriting? Will his companies receive a fee? Why is the entitlement offer partially underwritten?

Ian Chalmers: As a Director and 26% shareholder, Ian is clearly committed to the Company. He believes in the growth story and how we’re going about achieving that. He therefore likes to participate in fund raisings where he can. He will receive a fee of 4% from Regal Funds Management (the underwriter) for sub-underwriting the entitlement offer. These are normal commercial terms which are disclosed in the Entitlement Offer Booklet which can be viewed on Alkane’s web site at www.alkane.com.au. The entitlement offer was partially underwritten because we know that Ian Gandel, the other Directors, senior management and some major shareholders will be taking up their entitlement. We considered that there were around 30-40% of shareholdings where we didn’t know the intention and that is the amount we decided to have underwritten despite expecting a large take-up by those shareholders."
http://www.alkane.com.au/reports/asx/pdf/20120306.pdf

Guess that was the price he demanded for accepting the further dilution. On the one hand, it does bother me a bit for the reasons you gave. OTOH, I see it as an insurance against any players that might try to take Alk over on the cheap - I want to see Alk paying nice dividends, would not like being bought out at 3-4 dollars ...