So you got me thinking Mitch.Regarding debt, it will depend debt...

So you got me thinking Mitch.
Regarding debt, it will depend debt on what terms NZO lend money to CUE.
A high-interest loan might be a clever way of channelling some cash from CUE to NZO.
Convertible notes would allow them to convert to equity, and increase their ownership.

But really, I think the logic of a takeover of CUE makes complete sense. And I have a feeling CUE management wants this too, given the very understated recent quarterly report.

So the usual route would be for NZO to offer stock to CUE shareholders, but that is ruled out immediately by the fact that CUE shareholders wouldn't want stock in a company effectively owned by OGOG.

So that leaves a cash offer. And my initial instinct was that NZO couldn't finance this. But then I realised, they only need to pay for half of CUE's market cap (as they already own the other half). 50% of Cue's current market cap is ~$27 million. With a 50% premium, NZO would need around $40 million in cash.

Now, looking at NZO's cash levels.
And the end of Q1 they had NZ$39 million, which equates to AUD $35 million.
Now we deduct half of CUE's cash holdings at end of Q1 (because NZO includes these in their cash holdings).
This leaves ~AUD$28.5 million in cash for NZO.
Now let's assume NZO increase cash holding by $5 million this quarter (excluding share of CUE's profits) on the back of high oil and gas prices.
That gives them AUD$33.5 million at end of Q2.
Now add AUD$21 from recent capital raising, and their cash levels around now are around:
AUD$54.5 million.

So they could offer cash for the remaining 50% of CUE with a generous 50% premium and have significant cash leftover to finance investment. They would also gain access to CUE's cashholding in the event of a successful acquisition.

So, given the logic of NZO taking over CUE, I think a cash offer is entirely possible. And maybe NZO saying they are raising so much cash when the NZO shareprice has been languishing (i.e. not the normal circumstance a company would rush to dilute itself so much) in order to "extend finance to CUE" is just a convenient cover story. It also contributes to a narrative that CUE can't finance its own investments (despite them being highly profitable in their own right).

Not saying it will happen, but it sure ties to together some otherwise strange/suspicious behaviour/decisions.

@Sharetrader78 - have you got any thoughts?