Here is from fatstocks, Earlier I metioned in another thread I...

Here is from fatstocks,

Earlier I metioned in another thread I had been working through an example that might be of interest regarding the consolidation of shares 1 for 10 and the subsequent issue of one bonus share for each eight shares held and the issue of three free attaching options for evevy share held post consolidation.

The average investment in a parcel of shares seems to be about $10,000. So for the purpose of this example the following assumptions are made.....
buy $10,000 worth of GDA before the bonus offer goes "ex" . This date will be in news to the asx later this month. If the shareholders at a meeting soon to be advised, vote later this month to consolidate the shares into one for every 10 held, and say the share price between now and the "ex"date is 4c to pick a figure ( substitute whatever price you buy them at, for the 4 c example I am using).

I have not included brokerage,GST etc for simplicity

$10,000 will buy 250,000 GDA shares at 4 c
250,000 becomes 25,000 shares after the consolidation.

after consolidation the equivalent share price will be 4c x ten = 40c ( I'll explain the dilution factor later) and the equivalent GDAOC option price will be say 3c x 10 = 30c

the one for 8 bonus share issue calculated on the 25,000 shares gives you an extra 3,125 GDA shares for free.
25,000 plus the free 3,125 shares = 28,125 shares.

to work out the three free attaching options for every 5 shares held, start with the 28,125 and divide by 5 = 5,625 then multiply by 3 = 16,875 GDAOC.

Prior to consolidation you had 250,000 GDA @ 4c = $10,000
After consolidation you have 25,000 GDA @ 40c = $10,000
Add the free bonus shares and you have 28,125 @ 40c = $11,250
Add the 16,875 free GDAO for every 5 shares @ say 30c is 16,875 x 30c = $5,062.50
Add the GDA and the GDAOC and you have $11,250 plus $5,062.50 = $ 16,312.50.

The above example is all good news for holdersof GDA, provided the shares trade at a mutliple of ten times what the equivalent price was and the market capitalisation stays the same. Normally after a consolidation shares might drop a bit. But in a rising share price and with news out about the time of the consolidation, there is a unique set of circumstances that might make this consolidation even better if the share price is on the increase due to market support and continuing good news.The risk is the same as always ,will the share price go up or down after you buy your shares?....If it stays the same ,the consolidation has no effect other than bringing some eficiencies to the company in manageing the logistics of shareholdings.

If you buy in at say 3c or 4 c or 5c and the share price is say 12c before the time they go "ex" and they continue to rise after the consolidation kicks in ( which is still cheap considering the small market cap of GDA and what they have and might have in the future)it's a pretty good result, there are lots of scenarios, just put in whatever scenario you see might occur to see the result you might get.

The GDAOC currently have an exercise price of 1.2 c exercisable by june 2010, after consolidation it will be 12c ( 1.2c multiplied by 10) and still exercisable by june 2010. The GDAO options are well and truely "in the money".

To receive the bonus shares and free options ,you have to buy between now and hold the shares through the ex date ( which I don't know yet).

I am off now to do a surf patrol at my local club and will post on this same thread my thoughts on the market cap and dilution factors after mid day.