In response to iceman.11 on 10.10.24, ‘how much dilution would be too much?’, I have tried to get some perspective on how much dilution might happen in the IPO.
We will get one Holdco share or CDI for each of our existing AVR shares, and my understanding is that, if the Nasdaq IPO goes ahead, the value of the shares or CDIs will go up or down to the IPO price set by the Holdco Board, then closely track the price set by the market on the Nasdaq. If my understanding is wrong, please let me know. It would be nice if the American investors were so keen that the IPO price could be set at US$20 (about A$28), but I don’t think that is realistic, why would they want to pay a lot more than the current price on the ASX?
Pricing and Dilution is covered on pages 38 & 39 of the Scheme Booklet. If we assume that the IPO might raise US$100m from 10m new shares @ US$10, our 100% ownership of the current 21.138m shares would go down to about 68% of 31.138m shares, a dilution of about 32% (see the Table on p39 of the Booklet). On the other hand, if the current price on the ASX was around A$25-26, as it was early in 2023, the IPO might have raised US$100m from only 5m new shares @ US$20, and our ownership would then be about 81% of 26.138m shares, a dilution of about 19%. This shows how downward manipulation of the price on the ASX, if it can be proved, made it cheaper for new investors to enter, and gives us an estimate of our extra dilution, 13% in this example, caused by the manipulation. I think we would be justified in seeking compensation from the manipulators for this extra dilution.
Proving manipulation requires access to the names of traders and brokers, to identify who has repeatedly placed manipulative orders in the Closing auctions, or has made many ‘wash’ trades which resulted in little change in beneficial ownership, for example, and would probably require a lot of work to build up solid evidence. Proof of manipulation might possibly enable the offenders to be warned off by threat of legal action, or, in the end, a case for prosecution and compensation.
I don’t have any experience in manipulative trading or legal action, I am just following the questions that come into my head.
AVR Price at posting:
$11.50 Sentiment: Hold Disclosure: Held
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