is mhi playing games?

There were very interesting suggestions MHI is playing games. Can anyone please explain the logic why they think MHI is playing games by questioning whether the conditions precedent were fulfilled? Why MHI likes to drive the share price down? How will MHI benefits from a depressed share price in July 2005? Is it to maximise the conversion rate of their convertible bonds? Let us analyse if this could be the motive.

The first tranche of $40M convertible bonds are exercisable between 31 March 2005 and 1 March 2008 at a conversion price of $1.10 or the VWAP 30 ASX days prior to conversion subject to a floor price of $0.60.
The second tranche of $20M convertible bonds (I assumed will be taken up) will be at a conversion price of $2.40 or the VWAP 30 ASX days prior to 30 June 2005.

A very low sp after 30 June will not benefit MHI second tranche bonds as the conversion price is already set at the VWAP 30 ASX days to 30 June (the price your beloved CMQ management failed to disclose. Any competent company could easily worked out the VWAP within a short time after 30 June!)

All bonds will be handsomely paying 8.5% coupon rate to MHI while secured with a floating charge. CMQ is paying for the MHI appointed management team and directors and big veto over the appointment of the CEO.
A very low sp 30 ASX days to the intended conversion date will benefit MHI as it will result in a low conversion price for the first tranche bonds. But is anyone seriously suggesting MHI will benefit by converting the bonds now or in the very near future?

“BUT MHI must convert if the sp hits $4.00!!”, I can hear some CMQ champions say. That’s true but is the sp not even near $2.40!! If the questioning of CMQ was done to depress a $1.10+ share price, (bad faith?) MHI’s reputation can be taken to the cleaners and maybe further. There are laws, rules and regulations governing the behaviour of a majority shareholder to safeguard the interest of minority shareholders.
So why take the risk of battling the regulators when the sp way below the $4.00 when MHI is gainfully harvesting the fruits from the convertible bonds?

IF the sp hits $4 in July or in the weeks ahead, MHI will make a gigantic profit as they will get $4 shares for the price of $1.10. Isn’t that going to make MHI shareholders smile? Contrary to what the Wiseguys suggested, MHI stands to gain a lot more by driving the sp upwards and as quickly as possible. Make a wish, say the sp is $8.00 on 26 July. MHI would have make a whooping kill by subscribing to the $20M bonds on 15 July!!

So please Mr Wiseguys, I beg you to share the secret reasons why MHI is playing games to depress the sp!! The only possibility I can think of is if MHI intents for (in the words of some posters) “this baby is heading to heaven”. This unthinkable scenario has MHI driving the sp down, gaining maximum shares and selling the baby's soul to heaven. I better not venture my discussion down this path even though this could be a possible scenario if MHI is playing games!!

Cheers