letter sent to trevor rowe today

Dear Trevor

I am a holder of a small number of BCSCA securities. As you would be aware, the time to pay the second installment on these securities is approaching.

I see that you have made a number of strong statements about the obligation of investors to make the payments on these securities. As a shareholder who purchased securities on the ASX market after the IPO, it is not entirely clear how I am presumed to be bound by the prospectus, to which I was not in any way a party. But that’s not the point of this letter.

I am only obligated for $3,000 this year ( and another $3,000 next year ). However, it is apparent from media reports that there are many shareholders who are unwilling to, or indeed incapable of , paying for them. You have asserted several times, that the payment of the installments is underwritten, that is, if the shareholders don’t pay up then the underwriter has to pay up. It is my understanding that the underwriters have already pocketed fees amounting to hundreds of millions of dollars for providing this guarantee.

What concerns me, is that I pay up, and many other shareholders don’t, and the underwriter succeeds in evading their obligations , as has been suggested in the press, that I will lose even more money. Anyone who pays up for the second installment will be shown to be an even bigger idiot than the people who paid up for the IPO.

What reassurance can you provide at this time, concerning the current willingness, and indeed, financial capacity of the underwriters to fulfill their obligations under the underwriting agreement, which risks they have agreed to take on and for which they have already been paid, stupendous fees ?

What we require from you, Trevor, is that you procure from the underwriter an up-to-date and unequivocal statement of their willingness and financial capability to fulfill their obligations. If you are incapable of procuring such a statement, investors will be able to draw their own conclusions about whether it is responsible, or not, to throw good money after bad.

Due to the timescale, we require that you procure this information prior to March 24.

The second thing that we require, Trevor, is that arrangements be put into place so that, in the event of the project collapsing due to the failure of the underwriter to fulfill their obligations, investors who have paid the second installment, are entitled to the return of that money, in priority to any payments being made to any other parties.

I would suggest the appropriate thing to do, would be to establish a separate trust account to hold payments made by investors in respect of the second installment, until such time as it is established that enough investors have paid, and the underwriter has fulfilled its obligations, to enable the project to proceed. In the event that the installment raising fails and the project does not proceed, then repayments of the second installment can be made to those investors from that trust account, before any question of distributing the residual value of the enterprise ( whatever may be left of the money raised in the IPO ) is considered.

It is my opinion that you are much more likely to procure investor compliance with your capital raising if you can assure those investors who do pay up, that their second installment will be repaid if the underwriting fails.

I look forward to your timely reply.