liquidation is a better option for us, page-14

Assuming that the Springtree controlled fund don't get away with removing the rights of shareholders to vote on this issue then shareholders would seem to have two primary scenarios as I see it. These are:

a) Willingly grant almost total control and ~95+% of the equity in the company to ASOF then hope for the best. This scenario still leaves MST with virtually no money to turn things around so massive further dillution must be assumed even after ASOF have been granted almost total control. My guess is that they would chose to underwrite an issue knowing that the vast majority of holders won't hand over another cent given what has happened and this would likely see their percentage increase closer to 100%. Its hard to see how shareholders (excluding ASOF) will own more than just a few percent under this scenario. They will have little if any say in anything and the stock will most likely be completely illiquid.

b) Shareholders say "no" and force ASOF to either take the loss or come back with a more equitable offer. My bet is that ASOF have a lot more to lose than anybody else if it goes to liquidation so they would have to consider making shareholders a fairer offer. No guarantees but what would you do if you were them? Throw the dog a bone or cut off your nose to spite your face?



Reading between the lines the last announcement seemed to want to deliberately highlight the threat of liquidation. I have previously raised concerns about some of the statements made in that announcement and I believe these still hold true.

Either way if the choice isn't taken from them, shareholders have to roll the dice one way or another. Can't see any comfort in either scenario but my trust for ASOF and whoever control them is virtually zero so my gut feel is whatever they suggest is not what we should do. For character reference lets look at the key events involving this lot since they came on the scene:

a) they struck a private deal to buy secured notes from an existing notes holder presumably very cheaply. In order for this private transaction to go through they demanded that shareholders agree to 90% reduction in the conversion rate for debt to equity. This effectively multiplied the equity translated value of these noted by 1000% and dilluted the crap out of everybody else.

b) They offered to forgive a small amount of the debt if shareholder pumped in more cash via a capital raising.

c) They offered to loan the company money to help keep things moving then they suddenly demanded the money back, sued the company and made us pay their legal expenses with no explanation whatsoever for this action. This left the company worse off than before.

d) They took most of the remaining funds paid to themselves via an interest payment and knowingly left the company in a position whereby it had to be placed into administration. It went into admin within 1 week of this event. If shareholders want to know what happened to their money from the capital raising, my guess is you can stop looking right here.

e) ASOF structured a deal to take almost total control of the company's equity for next to nothing from the administrator.

f) ASOF approached the ASX and ASIC requesting that they be allowed to bypass shareholders and not have to ask them for approval for their proposals, in spite of shareholders voting entitlements on such issues.

g) We get a letter/announcement warning us that if ASOF's proposals aren't passed the company will probably be liquidated and shareholders will get nothing. That looks very much like a threat to me.


Personally if given the choice I'm leaning toward saying no. My gut feeling is that I will never see a single cent come back from this venture irrespective of how I vote but there is a principle at stake and I agree with others who voice this sentiment. My gut feeling is that we stand a chance of being offered something better if we roll the dice and say no. If we roll over and say yes then we are agreeing to take virtually nothing.

The above is my opinion and recollection only. Do you own research as I know most here have painfully done.