Ann: Change in substantial holding, page-161

I should have mentioned that this calculation is for the worst case scenario (from the point of view of Bell Potter), i.e. the Retail Offer completely ignore by retail shareholders and Bell Potter ended up having to subscribe for all of the available shares under the Retail Offer.

We know for a fact that this is not the case. If we assume that just under half of the available shares had to be subscribed by Bell Potter, let's say 4,000,000 shares, then the calculation becomes:

Margin = AUD$2.28m / 4,000,000 shares = $0.57.

Margin in % = $0.57 / $1.40 = 40.7%

In other words, unlike loyal shareholders who are currently already underwater, Bell Potter can afford for MSB shares to drop 40.7% from the $1.40 level to $0.83 before it becomes underwater.

As we can see, as the number of shares that Bell Potter had to subscribe decreases, its margin of safety increases.

We will find out tomorrow, 15/09/2017, if there was any shortfall and its size.

If I were Bell Potter, I would try to get rid of all of their MSB shares before the MNK deadline arrives. Just in case there is no partnership, Bell Potter wouldn't want to be caught with MSB shares still sitting in their balance sheet and vying for the exit door with other disappointed shareholders.