Ann: Entitlement Offer to Raise up to $10.8 Milion, page-48

Hi @LommiMario

"Soppose 50% of the shareholders dont take up this offer, the big shareholders, management, can take those up"

The same opportunity is there for all shareholders if they wish to avail themselves of it. As V said, this is a very retail investor-friendly CR. Equal rights for all existing shareholders, and no preference given to institutional investors.

I think the reason for the CR is simply that VMT are caught in a squeeze between their contractual obligation to build the new factory, and a sharp contraction in cashflow. This situation has been further exacerbated by recent expenditure to take over distributors and acquire Soco IP. These outflows would not have been factored in to the planning, but were opportunities too good to miss.

Had sales & forward orders held up, these expansion activities could all have been adequately funded from surplus (with perhaps a loan facility for a year or so). However, given the situation the company finds itself in, this is now the best way forward.

Unfortunately, due to the low SP, the offer is being pitched at a substantial discount to NTA, which means shareholders face effective dilution if they do not take up their full entitlement (or alternatively acquire a like amount on-market). This does produce an element of compulsion to the offer (always better to raise capital when shares are over-valued). However, on the plus side there is a sound business case behind the CR, unlike the many bottomless-money-pit biotech research & minerals prospecting stocks on the ASX.

All IMO.