Ann: Final share buy-back notice - Appendix 3F, page-2

In effect the share buy back plan has free carried the remainder of RT's options.

If anyone bothers they can numerically demonstrate for themselves the following:

i.) If he were to dispose of all remaining options BELOW the buy back price he would be BETTER off, in nett terms, than if he had repaid the loan.

ii.) If he were to dispose of all remaining options AT the buy back price he would be EQUAL with, in nett terms, paying off the loan.

iii.) If he were to dispose of all remaining options ABOVE the buy back price he would be WORSE OFF, in nett terms, than if he had repaid the loan.

(Ignoring, in all cases, any financing costs in repaying the loan.)

Of particular interest is iii above. To put it into figures.

Consider selling shares at an SP of $10.
Repay loan: Nett profit is
(2.0m * 10) - 1.56m = 18.44m
Share buy back: Nett profit is
10 * (2.0m - 501607) = 14.98m

i.e. RT would be $3.5m worse off because of the share buy back. I think it would be fair enough to say that an SP of $10 is not anywhere near the horizon at this stage, else a different solution would have been found.

As we all expect the SP to rise above $3.11 RT has been given no advantageous treatment wrt the final nett worth of his options. The term of these options was about to expire and something had to be done. However, I would not expect the other loan funded option holders to be lining up for the same treatment unless they become faced with the same situation.