Iwant to remind everyone, that ARU is our company. And ARU management have to act and make decisions that are in the interests of current shareholders (not prospective shareholders or off take participants).
They did an extraordinary job pulling the debt package together. And reading between the lines, have achieved outstanding terms/prices in the off take agreements.
However:
ARU Management - Why are they making life easy for shorters?
After the recent quarterly, they announced the Cap Raise for $27-30 million. This was frustrating….but the worst part is the fund (or funds) who were short on ARU must of been part of the $20 million institutional part of the Cap Raise. And they exited a large part of their short position due to this gift from ARU management. I have heard management (except the Chair) repeatedly say they will not give the shorters any shares from Cap Raises. Yet it has happened many times now. Who are they using to arrange this? They need to sack them. I know that the Chair of other companies (Like David William of PNV), who actually have knowledge of the capital markets and who is shorting their company…and stop those parties getting an easy exit with Cap Raise shares. Who is responsible in ARU for this? Someone needs to be sacked for this. Shareholders have expressed this view via many emails and letters. Surely the buck stops with the Chair. Also, Management will know who the institutions were that partook in the Cap Raise. If they were to name them…I bet we can work out who was shorting us. Come on ARU Management, lots of us have asked direct questions on this issue. And we have got nothing back.
ARU Management - What are they doing to reduce dilution?
At the meeting for shareholders I spoke to Darryl and Peter and said that the Final Equity Raise, as is currently stand (US$713 + 80 m at around 20 cents) will erode all shareholder value in the short term.
I then asked the following:
1 - Have they exhausted all capital contributions from Aust Govt or USA Dept of Defence to reduce the amount of equity to be raised and hence reduce the dilution?
. 2 - Have they created competition for each equity bucket by talking to many different sources of equity including sovereign wealth funds (Aust’s version is the Future Fund). Even Venture Capital (they have masses of cash looking to deploy). This competition between them will increase the Offer Price they raise at and reduce the dilution.
. 3 - To further the competition between the parties, have they considered an Auction process? This is a great way to achieve the real price a party is willing to pay. It also is a way to quicken the process. All of these things would reduce dilution
The answers were as follows:
1 - Yes and was not likely anyway. (My reading of their body language and tone, this has not been fully exhausted by this management team)
. 2 - They don’t believe that these sovereign wealth funds would invest. (Again, they are just going on what their arrangers say. It is in the arrangers interests, to use their own set of contacts to set it up. If we had people within ARU with experience of this, they could go out and seek these alternative sources of equity.)
. 3 - Didn’t really comment. (Again, my read on this was it is not in the interests of ARU’s arrangers. They just want to use their ‘little black book’ and go have a few lunches and bring their mates into the ARU tent. There does not seem to be much creative thought into this whole process of getting to FID in the best interests of current shareholders).
Some others have posted this. You must watch it:
https://hotcopper.com.au/opinion/from-the-floor/149365/from-the-floor-with-kim-beazley-at-diggers-and-dealers-2024/
Given Kim Beasley’s comments recently saying that Aust would be better spending $3-4 billion on rare earth projects, then buying a new frigate for defence purposes. This is extraordinary from a former Defence Minister! And Kim would not say these things if he had not been briefed from parties within Govt.
So I believe my question remains. What are ARU Management doing to secure cash grants from the Australian Govt or the USA Department of Defence?
Just to give you all a feel for what that would do….lets say Aust Govt does not give us $3-4 billion as Kim suggested….but say US $400 million. That would mean dilution of only 42%…..and result in Market Cap/Share Prices around these prices.
The Aust Govt giving us loans/debt is great. But don’t forget, that those loans get paid back to Govt, with interest.
Management need to show us letters from Aust Govt and USA Dept of Defence, where they decline to make cash contributions. Have ARU management actually had these discussions?
And in terms of putting together the equity book….how can we trust these arrangers? They can’t even put together $20 million without giving the shorters an easy exit? Maybe we should all write to the Labor Party Ministers…asking them to make a cash contribution to ARU to secure Australia’s global security.
ARU Management - How is the executive remuneration aligned with current shareholders?
I’m concerned about Darryl’s (CEO) remuneration (and potentially other’s in ARU management). It is clearly not aligned with shareholders. Darryl does not get his incentive securities locked in, until the commencement of main construction. So he is currently incentivised to have a large capex budget (make life easier), and a low share price (gets more shares from his Fixed Remuneration).
How does this align with current shareholders?
Has the board created an incentive plan for it’s CEO that is not in the best interests of current shareholders? Surely they are liable for this?I’m going to be asking these questions from my lawyers. But we can all ask the board these questions too. Also...how has Hancock Prospecting (Gina) allowed this Remuneration package to be structured in this way?
And don’t forget…this has not yet been approved by shareholders. We will need to vote on this package (and others).
(20min delay)