LLL Demerger and Offer - Consolidated Thread, page-157

Here you go, boys and girls - some guide from the market as to the likely price of LLL post-listing:

OK – the FFX shares went ex-the 1-for-10.33 entitlement CR offer [@70c] and the [uncertain] Shortfall entitlement [also @ 70c]. The SP went down by 5.5c. Now remember that the ‘free’ 1 LLL for each FFX share entitlement remains until 6-June – and nothing else changed for the companies.

So what value is that fall in SP by the market ascribing to LLL shares?

The implicit value of the Shortfall Issue is difficult to ascertain because we just don’t know it’s size…too many variables...

Likely shortfalls could arise from:

· Given there is almost universal distribution of the ‘free’ pro-rata spin-off shares (some country restrictions…? but will have to be sold into post-listing market anyway - so not really 'shortfall shares') So these can be disregarded for most practical purposes

· For the CR 1-for 10.33 entitlement (and also the Shortfall entitlement):

o Local investors holding FFX in a SMSF (many will be unable to take up the entitlement offer – as LLL will upfront not be an Authorised Investment – so while they can receive the ‘free’ pro-rata spin-off LLL shares, they can’t 'trade' in the shares (yet))

o Similarly, some international investors will face similar restrictions due to legal/tax restrictions

o Then there are all those who – don’t understand; can’t be bothered due to the low allocation rates; don’t have spare cash; are put off by the uncertain market conditions; etc etc

· This could add up to a lot of shares. Note existing shareholders (as at 5pm 5-May-2022) can have priority to apply for up to 14.29 million of the Shortfall Shares – subject to Board final approval [blah, blah...] So I'm assuming these will (nearly) all be in play… but it doesn't really matter because...

o ... if you retained even one qualifying FFX share you can still apply for an [unlimited] number of the Shortfall Shares – so thevalue foregone is minimal – and can probably be ignored.

o Also a number of the major holders of FFX will be offered Shortfall shares by the usual brokers (come on down Euroz and Canaccord]

So the key loss in value for each FFX share today is they can can no longer participate in the [LLL share/10.33 @70c]. The market said that was worth 5.5c less… [Ignoring market movement in the last 24 hours due to upcoming Fed Rate news tonight]. So, the market is saying that decline in value [One LLL share@70c] /10.33} = 5.5c.

This implies that each LLL share is currently valued by the market at a 56.8c premium to the Offer Price of 70c = $1.27 per share