re: Ann: Recommended Takeover of Remaining La... Reiner,I do not...

re: Ann: Recommended Takeover of Remaining La... Reiner,

I do not think it is valid to do the comparison based on converting to $value using share price which is at the whim of the market, and given that we have had a massive dilution and injection of cash. Also it is unlikely that Stone could have converted their recieved FML shares into cash at the current price either then or now. Finally, the share price since the acquisition of Laverton also reflects the value of Laverton since it is a large part of the assets on the books, although dropping in value.

In my comparison referencing it to shares of FML it considers the asset as a fractional value of the company. I assumed that the dilution of shares was roughly equal to the value of cash received in the SG deal. If instead you want to work with cash value of shares received, you must include the cash the company now has on its books is at 5c per share, and is actually greater than the market capital!

Stumpytrunks.
"Can anyone out there actually honestly tell me that full control of Laverton operations for only 300 million shares is a bad thing? I think not."

Well, since you put the question so poorly it is difficult to answer, I can tell you honestly that FML already has full control of Laverton operations. This full control is being directly assumed, unlike the 'full contol' SG has on FML which is not (directly, although who knows how much they are leading these decisions).

I am happy to say honestly I think this full takeover is a bad thing, for the simple reason we are paying too much for it. The assets we acquire do not justify the price, particularly since we are buying from a distressed holder who has no power, they are not taking any of the profits from us as dividends because of course the operation runs at a loss. Based on our own book value of Laverton assets, we are paying too much, similarly comparing and their cost of production and net loss we are paying too much. If you read the financial report you will see the small admin cost we would save, but do you think this deal will be brokered for free? There will be even more admin costs in this full takeover.

An additional negative is we will gain a holder with 300M shares they are likely desperate to sell, and no other institutional holder will come in, these will be sold on market with due effect on FML. I would even consider this may be the intended outcome of this deal, since we have the cash and could have made a successful all cash offer at a much lower price based on the asset value. An even better alternative, since Focus Laverton is in debt and loosing money, it could have done a capital raising to extract more cash from Stone or dilute them sufficient to make a compulsory takeover possible, again at a much lower price.

You are however correct about the net current assets, we are certainly alive for a while to come, and the operational loss per quarter is nothing like $30M. I do think they will spend most of the money before the end of FY14 though on acquisitions and investments in plant.

I personally think you are off the mark with "scaremongering and bitterness", looking at the comments again and those that are thumbed up, I see people who are desperate to find a silver lining in everything that happens. If you look at the share price over the last 2 years you will see if the yays or nays have it right. Most of us who comment honestly are only talking about the effect things will have on the share price. You saw a hint of that effect when the price was down 15% at one point after the announcement. If you think we all want to ramp the stock down just to increase our holdings at your expense you are wrong.