Firstly, some may recall my decision of several months back to cease participating here. I consider, however, this issue of sufficient importance to again offer comment. 1. This is almost a copy of the MA1 (Monash) scheme. The big difference is that MA1 options were listed, GC1 will not be. I would have thought that LIC options were a bit on the nose, but apparently not. They have just got more complicated. 2. On a first order basis, neither of the option issues will make any difference to the value of one’s shareholding. Having more bits of paper floating around does not make a company more valuable. The second order affects of maybe having a (potential) larger market cap include the positive of having fixed costs spread over a larger shareholder base and the negative of having to deal with a somewhat lumpy influx of cash if options are exercised. 3. Psychological effects are somewhat more complicated. There could be a short term boost as some investors buy before 30/4 to get there ‘bonus’ options entitlement. After that there would likely be a decline in new buying as investors realise that the company will have an overhang of options to which they have no entitlement. Existing shareholders who have been looking to top up there holding may now not bother. The share price should adjust for all this, but ...... 4. This is where I may (again!) get into trouble, but while one assumes it is legal, there just seems to be something not quite right with a company chairman / CIO topping up his shareholding, then in the same month announcing capital changes in order to, in his words, “reward shareholders”.
GC1 Price at posting:
64.0¢ Sentiment: Hold Disclosure: Held
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