Regarding dilution..The ASX release says there will be a maximum...

Regarding dilution..

The ASX release says there will be a maximum of 1.8 million shares issued for the SPP (in addition to the 5.2 million in the placement to friends of the manager). At the September report, thats 1.8 / 34.6, which is 5.2 shares reserved for every 100 existing shares. I doubt that will be enough so expect very big scale-backs in the shares you apply for. For example, if all shareholders applied for an equal number of shares that could only get 5.2% of their existing number of shares (ignoring $30,000 limit). Of course some shareholders will not apply.

So how big is the NTA dilution? Well at the September report the NTA per share was $1.44. Thats 34cents more than the new issue price at $1.10. Since 7 million new shares will be issued and there was 34.6 million shares at that time, thats (34.6 x 1.44 + 7 x 1.10) / 41.6, which is $1.38 per share for the new NTA. So the NTA dilution is around 6 cents per share ($1.44 minus $1.38) that existing shareholders are transfering to the new shareholders.

So the next question is how many new shares do you as an existing shareholder need to buy to avoid loss? Well again using September report's numbers, every new share you buy will get you back 28 cents of NTA after the issue ($1.38 - $1.10). So, for example, if you had 1,000 shares you would need to buy 214 new shares to break even ((6 / 28 * 1000). In other words 21.4% of existing shares.

Of course, the NTA could crash below $1.10 before you stump up the money, in which case you lose nothing Let's hope not since I am an existing shareholder.

The reason I do not like these dilutative raisings is that I am retired and live off the income. I do not have cash lying around to participate in these rasings. Cornered rabit is a suitable metaphor.

I have rounded the figures above so no guarantees. Do your own calculations.