insufficient uptake, page-88

IMO this latest announcement is as good as could be hoped. I was worried that existing shareholders would be diluted without any choice but that's not the case. Assuming all 650 million new shares get issued, then existing shareholders would need to invest another 48c per share currently held to avoid dilution. That's compared to 35c per share held under the Entitlement's Offer - not a massive difference. Of course, the SPP may be oversubscribed but it appears they have taken into account the response to the Entitlements Offer.

The real difference is that at 10c per share this would value Red at $13.5 million before any new shares and associated cash is taken into account, as opposed to $47 million at 35c per share. Not hard to see why there might be some more interest now. Compare $13.5 million to the market capitalisation of $83.7 million right before the disaster. That's a $70 million hit for current holders, not including however much the individual losses were at that point. Debacle!

So it looks like three basic choices-
1. Do nothing and sell out at roughly 10c per share in a couple of months when they trade again and never talk of Red again.
2. Put in more to avoid dilution and hope the CDO is lifted soon (an update would be nice!).
3. Vote against the Placement in the general meeting mentioned in the announcement and send Red bankrupt to cause a firesale. Must admit it would be just a little bit satisfying to do the BOD out of a job.