The directors have proposed the following resolution at the...

The directors have proposed the following resolution at the upcoming AGM:


This proposal is not in the best interest of the public shareholders or the value of the company on the market.

The company going from development to commercial product sales undoubtedly will need additional capital. Dilution is to be expected and a normal part of growth. However, IMHO there are good reasons why the shareholders should be asking hard questions why the Board did not propose a rights issue (1 for 4) instead of this proposal, which will give the directors free reign to issue an additional 10% on top of the 15% available already.

1. If the Board is asking for authorization to issue 25% additional float in the coming year its likely because that's what is needed and that's what is going to happen. If that 25% goes to new investors then that means a 25% devaluation for the public shareholders.

2. Many of the shareholders have been around for the extremely protracted, and painful from a shareholders standpoint, development period. It is expected and reasonable to offer some loyalty and reward in return to those shareholders as @BobF has oft hoped might be the case. This is the moment to show that thanks.

3. The Board and company has a public relations problem, that is, a trust problem with the market that has an impact on perceived company value and therefore share value. That impacts the ability of the company to raise capital in the future and it further impacts the value of current shareholdings along with the anticipated dilution. A short list of why that issue exists is: a) ASX questions over proper disclosure of price relevant information; b) Financial miss-management resulting in suspension; c) Lackluster effort to address the suspension; and d) Misleading announcements as to progress and/or future actions or positions. The well earned reputation is that the majority shareholder, Fred Bart, has little or no regard for the interests of public shareholders who might acquire an interest in the company. That rightly effects stock value. Giving shareholders a first option to provide the additional capital could only mitigate this issue.

Given this public company is being run as Fred Bart's private company with him controlling 51% of the shares, I realize this proposal is a foregone conclusion. But it would help pressure the Board to make it known that the disregard for the shareholders is not going unnoticed. The question should be asked at the AGM: Why is this capital not being raised with a rights issue, and the vote should force a poll so it is clear the Board is going against the majority of the people involved if not the majority of shares.