It is very interesting that for the first time since i can remember the rights issue has not been underwritten by directors and significant shareholders - the number 1 shareholder who has supported the company including loans has very deep pockets so i doubt its because they are caught short!
It indicates to me, especially after reading the company response to the ASX yesterday, that the company is very confident it has a deal closing soon and that this rights issue was just for the benefit of shareholders. They don't need the cash this time. $1.5M from the placement suffices to get them through to a deal. Otherwise, they would be desperate to raise as much as they could in this round. We know how quickly they burn through cash
It is also quite possible that this deal is signed before the rights issue closes and therefore organising an underwriter was completely pointless as everyone will take up their rights. I'd be a bit nervous about selling stock now to pay for rights as there is every chance the share price explodes before it closes in this scenario.
Call me an optimist, but i am actually quite hopeful this time!
KPO Price at posting:
0.7¢ Sentiment: Buy Disclosure: Held
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