Ann: Fundraising for working capital and to maint, page-19

re: Ann: Fundraising for working capital and ... Hi fellow CFU'ers,

For those that are saying they don't want to spend another cent in the raising ...

I don't know if a technique I picked up off another poster on HC (Jaques) is folly or not, but it seems to have worked for me in previous capital raisings.

If you're not wanting to invest more (which I'm not; I'm already way deeper into this than planned), you sell a portion of your holdings whenever the price is above that of the offer. Ideally, if you see the announcement in time you can do your partial sell-down at a substantially higher price before the expected drop, as the market price usually ends coming down to whatever the offer price is (I question the merit of discounts, or at least the size).

Then you're able to either re-invest with the proceedings and the money goes to the company, so you're being a bit of a Robin Hood, taking from the market and giving to the company when it needs it most (i.e. doing your bit without having to fork out). If you sold in time you can even pick up more shares, but even if not you can generally pick some time when there's a price higher than the offer to cover the brokerage on the sell, of course with none to pay for the raising.

The only risk is that you won't be able to pick up as many shares in the raising if it is a 1 for 4 offer or whatever, yet unless something has happened to get the company going gangbusters again you're likely to get your requested purchase (rights + extras) fully accepted.

I note that the day closed at 6.4c, and even if it drops again tomorrow there's typically times when you can sell above the offer price, especially prior to the rights cut-off.

There may be some risk to it, therefore I wouldn't actually recommend it (I wouldn't recommend anything to anyone any more ... been there, done that, got burnt, never again!). However, it's worked for me so far and I thought it was worth bringing up at least as a discussion point.

I'm disappointed like everyone else about the raising, but at least I know I'm going to be able to contribute without being out of pocket, unless for some reason there's great news and if so then at least my 2/3 holding still retained will be looking better than it was, plus still some rights available. I sold 1/3 of holding (ouch, but don't do calcs on the loss, as it should be coming back), but at least it was at 6.7c as it was dropping ... I was away from my desk for too long to get the initial news, otherwise it would have been 7c+.

Good luck to all, and if anyone does use a similar technique, I hope it works out (but no recommendations from me, right?!).

Cheers.