Ann: Renounceable Rights Issue May 2016-RUM.AX, page-26

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lorraina

544 Posts.

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05/06/16

05:42

Post #: 17954022
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Originally posted by peteski ↑

Resource exploration successes aside, WHSP was the catalyst for me buying into RUM.
A strong, successful company holding a major shareholding. I believe they would have a high cost of shares as I purchased a number of parcels around the time that WHSP made some of their purchases.
I assume they, like most of us have massive negative percentages blazing in red against our/their holdings.

This offer is a sensational opportunity to average down our cost base but I sense a feeling that some/many SH are at the end of the line with the continual decline in our investment and very wary about throwing more money into a bottomless hole.

WHSP obviously see value in this company or they wouldn't be underwriting and committing to their full entitlement and money and time is not a consideration for them.

Here's the catch 22. If we don't take up our entitlement WHSP will sweep up everything left over for .02c a 54% discount on the SP before the offer. We will be gifting them below value shares.

They could hypertheticaly increase their share holding to upwards of 50% at which time we effectively become a subsiduary of WHSP as they would be able to take control of the board and run the show their way. Not necessarily a bad thing, but if they take control I fear the liquidity in the SP maybe subdued and stay in the .02 range.

Then there is a Left Field possibility of an extended SP of .02c or lower which would make a perfect platform for a total takeover offer at say .04c a 100% premium , a SP less than the current pre rights offer and massively undervalued to the potential of the RUM resources.

Just a few ideas playing on my mind in this decision making process.

Really torn on whether to take up the offer or not.

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An excellent commentary thank you.
I only have a very small holding,and have decided to take up my rights.
The original reasons for buying into this company remain the unchanged.;ie massive fertilizer resources of phosphate and potash relatively close to huge markets.

Last edited by lorraina: 05/06/16

RUM Price at posting: 2.1¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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