1) It is extremely common in underwriting deals that a large part (all?) of the risk is sub-underwritten. The underwriter who has the licence to underwrite, keeps part of the (additional) fee (paid by the company), sharing some of it with the subbies. Money for jam. Yes, I understand the underwriting part of it.
2) Given that Dan Fraser is a senior employee of Merchant, he could have easily introduced the underwriting deal to Merchant and as an extra inducement, offered to sub-underwrite most of it. That theory actually puts it all together and makes more sense than some of the other things I thought of.
3) One would suspect that Dan Fraser is seemingly mates with WW, part of his corporate contacts. (Perth corporate world is small). Hence the links and introduction. No doubt about this at all, part of the reason that I think the big boys would like WW to maintain his seat on the board, and IMO, will no doubt achieve.
4) It is even possible that WW also sub-underwrote some of the shortfall?? Although it would be money for jam so to speak, I wouldn't think this would be possible without disclosure, hence why I don;t think this would be the case.
Really nothing very wrong with any of this - apart from the lack of a substantial shareholding notice - and a lack of detail in the Director's disclosures (ie that he sub-underwrote part of the company's RI for a fee?? or got handed some of the underwritten stock as a freebie by his mate).
Equally normal - in the case of a major shareholder like Sprott, the company would invariably approach them before a major change of direction to assess their likely reaction, especially one as important/influential as Sprott. It now seems likely that Sprott indicated they would not be part of a lithium play... I have no doubt at all that this was the case as indicated with Sprott exiting prior to the announcement of the Li deal.
The BOD faced a massive overhang of selling - at a time they also needed to raise capital. A prudent Board would seek to make arrangements to place the Sprott holdings (shares and options [which probably don't require a substantial shareholder notice until exercised?]) into safer hands. Sprott would happily agree to a managed exit as they would know that dumping all their holdings would result in a worse/nominal return. The Sprotts of this world are happy to move on to the next play.
Hopefully you can piece it all together. Sounds like you're close.
But it shouldn't be this difficult for shareholders to work out what has gone on! Sometimes a horse does need leading to the water trough
Thanks for the input
BGS Price at posting:
29.5¢ Sentiment: Buy Disclosure: Held
