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09:20
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Originally posted by Undaunted
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I think I understand the game plan - please correct me if I am wrong. According to the prospectus, achieving the minimum raise will maintain the status quo. In other words, trade creditors and debtors are paid off but the company remains starved of working capital and will still be carrying 100% of the Wise JV costs and other offtake baggage. If PLV end up short of the minimum raise, the creditors will be left with no choice (aside from appointing Receivers) other than converting up to $18.5m of debt into shares. So in addition to the GNR “in principle” underwriting support of $26m, there could possibly be $44.5m of cornerstone support. Capital Guardian’s offer (who apparently didn’t want to be identified) of an extra $15m in shortfall support IMO looks very conditional at this stage and may not eventuate before the close of the offer unless extended further. So at least a further $3m is required from elsewhere, otherwise the offer will be withdrawn and the show is over. From my perspective, the GNR/creditors scenario will not be ideal as GNR could effectively end up controlling PLV and there could be a big overhang in the market from the creditors and existing shareholders exiting once it resumes trading. If PLV manages to secure $15m from Capital Guardian, I presume the creditors could then elect to take more cash, but this could leave PLV at around the minimum subscription level. In addition to Patersons shares, options and fees from the last rights issue and the current 300 million free shares (notionally worth $3m), they will also be entitled to a $200k advisory fee and 6% of the total amount subscribed or placed under the offer. So if the offer reaches the minimum subscription, Patersons could receive a further ~$3m fee leaving PLV with a paltry ~$4.2m in cash (as per Appendix 2 of BDO’s report). I trust that they will be subscribing for their full entitlement of $2.6m (based on their declared holding of 29 million shares at the date of the prospectus) which could be critical in getting PLV across the line (and their fee secured). So what’s left for shareholders - not that much from my read of the tea leaves. Begs the question why the existing shareholders weren’t offered any free shares for their past loyalty.
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"""(So what’s left for shareholders - not that much from my read of the tea leaves. Begs the question why the existing shareholders weren’t offered any free shares for their past loyalty. )"""
