I've been holding off on this one as I wasn't impressed with the...

I've been holding off on this one as I wasn't impressed with the underwhelming IPO support, resissue of prospectus etc but these piggyback options series have my interest. Under the terms, a holder can get a second option by exercising the first lot by August 2015 - clearly they are keen to generate some August cash flow, so I would imagine there will be a concerted effort to see them over the exercise price. I only wish the exercise price was 30c or higher, rather than a miserly 10% above the current sp.

I note Raven Holdings (Phillip Capital) are being paid $500k (2.5M fpo) for services rendered and an additional $500k on successful completion of the entitlement issue; but since they are underwriting the issue, it's a fait accompli. So, $1M paid to Brendan Fogarty and he will own a sizeable parcel of shares, which will hopefully not be free-float if he hangs-on.

At the time of the entitlement issue, there will be ~82M fpo on issue, so 2 for 3 = ~54M options to be issued.

54M CXZO @ 20c (assume 08/2015 exercise) = $10.8M

@ say 25c, and with ~140M fpo on issue, we get an mc of $35M

minus $10.8M cash (assume current cash is dwindled by then, as Sept 30 cash was only $2.6M) = EV of $24M

Current EV (assume $1.5M cash) @ 18c = $13.5M

What does all this mean?

If we're going to be doubling the EV of the company, come August, via the exercise of 54M options, we're going to want to see a commensurate flow of news to justify that. What's the biggest indication that this might happen? I would suggest Raven Holdings would have a fair idea of what's to come this year and assuming their end goal isn't to dump 5M shares plus whatever they are mandated to underwrite (half the options, for example, would mean Raven holding another 26M fpo or ~30M in total - $6M worth @ 20c) then one would think it could be an interesting year ahead for CXZ.

Keen to hear other's thoughts...