Morningstar $2.10 valuation, page-31

OK I will repeat myself very simply to you.

The Kentgrove facility will be dilutive (as I said above), and at no time did I say it would not be dilutive. So I ask again, how am I tripping over my own logic.

Again as I said on a previous post, large institutional brokers are not likely to sit down with the likes of MSB and put together an equity facility such as the one Kentgrove and MSB have put together. There are two main reasons for this:

1) MSB is not a household name, and is very speculative. Large institutional investors want blue chip, low risk and high yield stocks. They would struggle to place MSB shares at a reasonable price, if at all in any meaningful way. This we both agree on.

2) Kentgrove is a fit-for-purpose boutique focusing solely on small and micro-cap Australian stocks.

Here is an extract from their website when you click "about us"

"Kentgrove Capital is an investment management firm with an objective of generating strong returns for investors over the medium and long term. We generally hold a concentrated portfolio of equities based on bottom-up stock selection. Our primary investment strategy is to conduct fundamental research on small and micro-cap Australian stocks and buy when we consider a stock to be significantly undervalued, allowing ample margin of safety."

That is right, they have a client base that is looking for strong returns over the MEDIUM and LONG TERM, and ONLY from small and micro-cap Australian stocks.

Does MSB sound like a small/micro-cap Australian stock which could provide strong returns over the medium and long term?

I'll answer for you, Yes MSB is exactly the type of company Kentgrove's client base would be more than happy to invest in. That is why this facility was put together by MSB and Kentgrove, because Kentgrove are confident they can sell MSB shares to its client base with a reasonable discount, and MSB are happy to pay 4.5% for that service.

I do not know what discount MSB will be able to raise funds from Kentgrove, but I know from the above that it will be a lower discount than if a large institutional broker were to try do the same thing for MSB.

And to be very clear, there will be a discount and it will be dilutive... so please do not quote me saying otherwise.