Let's be clear here, the current OBJ holders have been holding...

Let's be clear here, the current OBJ holders have been holding and waiting for the company to turn around based on "OBJ technology" believing in the vision of the technology and the potential, plus with the recent announcements regarding Reduit. Now they are being given just ~25% equity in the "new OBJ", Wellfully, which is being valued at $112m (per the Agreement document).

Wellfully will be the current OBJ, plus a $73m Supplements Distribution company (that imports branded protein powder from the USA to distribute in Australian and NZ, nothing to do with vitamins) and a $12m warehouse in Sydney. The new equity is split between Danny Pavlovich (the current Nutrition Systems (NS) founder/owner) with ~31% and some new investors (putting in the $50m cash to buy NS via a capital raising) for ~44% of the new company. The new investors will likely be wanting a seat or two on the Board.

If you want to find out the truth, follow the money. It's always about the money.

OBJ are proposing a $50m Capital Raising @ 30c (post consolidation price) to partially fund the acquisition, the rest of the acquisition being equity in the Wellfully. They are also proposing to seek a $20m debt facility.

OBJ have engaged TTB Partners, based in Hong Kong, in relation to the capital raising. So, where do you get $50m from? You don't go putting your hand out for $50m unless you already know the answer you are going to get. A Chinese company (or group of companies) is my guess. That will give them just over 44% of the company and will be the largest shareholder group. Is there a possible link here for some distribution/contacts within China? Is there a product from China that we don't know about? Is this the real major missing piece of the puzzle we have not been told about yet?

It is worth a reminder that the total $50m from the capital raising will go to Pavlovich. So OBJ is actually no better off, cash-wise. Note that $5m is paid in cash after one year and another $5m cash paid after 2 years. That is why there is a debt facility needed - to fund the acquisition costs (over $4m) and costs into the next year. Who will give this debt facility? Possibly the new investors and that could be turned into equity at a later date? Why not just get $38m and rent the warehouse and that way current OBJ holders end up with a bigger piece of the pie? Or have the $50m CR and don't get the warehouse and have $12m cash in the bank.

There is something more here, but I just can't put my finger on it. Raising $50m at the current price seems strange (for a company with a MV of less than $30m) and OBJ does not need to buy NS. OBJ doesn't need a warehouse (OBJ can easily outsource this efficiently for it's future products) and it doesn't need anything to do with Supplements Distribution (NS is nothing like Swisse and similar companies). Just because NS has products in Coles or Chemist Warehouse, doesn't automatically mean that they will stock Knee Guard. There is nothing that needs to be "fast tracked" as OBJ doesn't even have a product range. OBJ doesn't need to acquire a $85m company to get access to retailers or distribution channels. There are much cheaper ways to do it than an $85m acquisition.

Someone asked for alternatives. Well, maybe it would be simpler to have an investor put in, say, $20m for 50% equity in OBJ and move on from there? Current OBJ holders would lose 50% of their equity (rather than losing the proposed 75% of their equity), but gain $20m in cash. $20m buys a lot of time and marketing professionals. There would be no $20m debt facility and no distractions. Reduit will have time to get up and flying (which many on the HC forum believe it can do in a short time frame), Body Guard can launch (apparently in calendar Q1 2020 and this has been in the pipeline long before any thought of buying NS) and the other areas of the business can continue on with what they are doing (P&G, etc). I am not saying you can easily find an investor to put in $20m, but apparently they are confident of finding investors for $50m to help fund the NS purchase.

I have possibly raised more questions than I have answered here. But something is not quite right somewhere. It's not a simple deal and a significant amount of information (pretty much all of the required detail) is still missing. No doubt more will follow with the AGM approaching and the Capital Raising documents required to be lodged. Who knows, the NS agreement could fall through and instead there will just be an investment into OBJ Ltd from a new investor. The bottom line is that the current OBJ holders are left wondering where their OBJ technology is going, that they now potentially have just 25% equity in.