Ann: Thirteenth Supplementary Prospectus, page-224

After having my previous post moderated, I have re-posted with the suggested changes to make it acceptable.

Hi @Basileus

Thank you for the response, though I'm still somewhat hazy about what actually happened in the underlying case of Queensland Phosphate and Paradise Phosphate vs Korda and Shepard?
http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VSCA//2017/269.html

If my interpretation is correct, the case could be summarized as follows:

1. Legend International Holdings owns Queensland Phosphate Ltd
2. Queensland Phosphate Ltd went into administration.
3. Mr Gutnick (uncle to Sholom and brother to Pnina) was director of Queensland Phosphate Ltd.
4. Queensland Phosphate owned 100% Paradise Phosphate Ltd
5. Sholom and Pnina were the directors of Paradise Phosphate Ltd (the same Sholom and Pnina that are running CGB).
6. Sholom and Pnina were also directors of Queensland Phosphate.
7. Liquidators were appointed as a result of Queensland Phosphate Ltd going into administration.
8. The overarching holding company (Legend International Holdings) sold their 100% share in Paradise Phosphate Ltd to Queensland Phosphate Ltd for $1, subject to adjustment based on valuation of Paradise shares.
9. The transaction is currently held in Escrow and is subject to a court case (the court case I am trying to understand and explain here) - with the administrators arguing that Paradise should be insolvent and the share sale agreement to be void due to sale of asset while insolvent.

What subsequently transpired, was that Sholom and Pnina sought to obtain a secured loan of $1 million from QBL (now CGB) to fund legal and other expenses of Paradise Phosphate Ltd.

In my own personal opinion, I interpreted what Sholom and Pnina have done for QBL in a positive light, with a thought that their large holding in QBL (CGB) could align them with broader shareholder's interests and could result in decisions being made in QBL (CGB)'s best interest.

However, to me this case raises some questions about Sholom and Pnina's integrity and judgement. I personally find this of significant concern, given CGB's small and questionably non-independent board . I get the impression (and this is my own view) that Sholom and Pnina consider CGB as a bit of a "cash cow" and were willing to take money out of QBL to benefit Paradise Phosphate Ltd (a company, who's business operations have nothing to do with the independent shareholders of QBL).

As @Basileus indicated it also raises further questions for me. I must question whether in light of the argued solvency of Paradise Phosphate Ltd and its currently under administration owner Queensland Phosphate Ltd, exactly what security could be offered for the sought after $1 million loan and whether the $1 million would actually be recoverable under bankruptcy conditions?

I further question, had it not been for the judge blocking the request, would QBL/CGB shareholders have a say in whether or not they were happy to loan the money to a questionably solvent Paradise Phosphate Ltd and take this risk on?

More importantly, my main question is that if Sholom and Pnina were willing to do something like this in the past, what does this say for the future of CGB and the decisions that would be made if CGB was facing some tough decisions? Would these be to benefit CGB, or would it be to benefit Sholom and Pnina?

Again, my own historic view has been very pro QBL (CGB) and I was completely on-board with the business model, CGB's latest developments and the vision of what CGB was trying to achieve. Though, after reading through that case and better understanding what was being argued has forced me to question CGB Director's ability to deliver on this vision. Add to this the fact that we are now at the 13th supplementary prospectuses almost 3 months shy of a year without trading, I find myself seriously asking, do I decide to sell on open? Do I hold? Do I buy more? I'm not sure at this point...