Thank goodness the directors of the RE have made the sensible decision to change the corporate structure. It was required as a minimum.
However the announcement was incredibly light on detail and I fear a massive dilution required by funding to do four things:
(1) Buy back the management from LLC for the "magnificent 12" - allow say $45m
(2) Issue shares to the RE for their relinquishing of their position. Naturally the announcement was very quiet on a likely valuation here and I see potential for a HUGE "gouging". For instance, if the RE asks for a greater than 6 times the revenue then that would be a blatant rip off...but they will, and it will be backed up by an "independent valuation". Anyone involved in LLP will know what I mean by this. Watch this space as we will see the GREED of our future directors on show here.
Of course they will try and sugar coat it by saying that they are not taking cash but an allocation of shares...but that does not help our NTA cause one iota.
(3) A pool of working capital to aid in future development. Anything less than $25m will be insuffcient.
(4) Costs of effecting these changes
So, I'd be very surprised indeed if we get out of this without issuing the equivalent of an additional $100m worth of shares...and even then, it appears we will still be saddled with the very ordinary management of Phillip Powell and co.
Personally, and based upon past performance, I wouldn't have them running the local cake stall. Go ask those in the industry what they think about Prime and you will have your answer. Compare them with their peers on the usual metrics and you will see that PTN are perennial cellar dwellers.
As I see it, you can change the ship, but if you've still got the same team of incompetents running it...the outcome is predictable...more of the same!
And saddled with an additional $100m of "ownership" that will want at least a 10% return, what the heck will be leftover for us?
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