New CEO Blog regarding the rights issue

I realize that the wording around Rights Issues can be confusing, more so for people not familiar with the stock market and the intricate world of securities.
We want as many of our shareholders (many long-holding and very loyal) as possible to participate in the offering, so I hope you find these words of explanation helpful.

Let me start with why we need the funds.
Drug development is an expensive business. I happen to believe that Novogen is sitting on some of the most valuable drug technology opportunities in the world, with potential therapeutics being developed across a broad range of indications from treating patients in late-stage cancer with just months to live, through to improving recovery prospects for people suffering stroke injury, through to providing hope to children with life-shortening diseases such as muscular dystrophy and SanFilippo Syndrome. This is not the dream of some starry-eyed dreamer …these are very real prospects based on very real and exciting data.
Putting the necessary horsepower behind these programs isn’t just a case of being good for shareholders ….there is a world out there of people dying of diseases that we may well hold the answer to.

The Rights Issue
This is a way of raising capital that gives shareholders the opportunity to maintain their degree of ownership of a company. If that is not important to you, then you do not need to do anything. Beyond having your holding diluted, the intrinsic value of your shares remains.
So the 3 possible scenarios when you receive your offer through the mail are:
You do nothing
You take up a proportion of your entitlement
You take up your whole entitlement.
You are being offered the opportunity to subscribe for 1 share for each 6 that you own. If you own 12,000 shares, then your entitlement is 2,000 new shares; 60,000 shares entitles you to subscribe for 10,000 new shares, and so on.
You buy these new shares directly from the Company. They have been created specifically for this offering.
You pay AUD$0.30 for each new share. You pay that amount irrespective of whatever price the shares are trading at, at the time you subscribe. Of course, we hope that Novogen shares will continue to trade above that price, but that is something outside of our control.

When and how do I subscribe?
You will be receiving all the information you need through the post early next week. But by tomorrow, we will be positing on our website the Prospectus to the Issue along with the sort of information I am providing here.
The Issue opens on May 1 and closes on May 29.
That means that you need to return your subscription form by May 29. You will need to indicate on the form the amount of your entitlement that you wish to take up, and then send the required funds to the Company as will be explained to you.

What does the Date of Record mean?
This is the date at which we determine you to be a Novogen shareholder and therefore entitled to participate in the Rights Issue.
The Date of Record is 5 pm 1 May 2015.
It is important to note that if you want to increase your shareholding as a means of increasing your entitlement, then it is important that you have concluded that transaction by 5 pm Tuesday 28th April to allow for the T+3 settling period.
Similarly, if you hold Novogen options issued in 2014, then you will need to have converted them by the same time in order for them to qualify as shares.

What does non-renounceable mean?
Rights Issues are described as being either renounceable or non-renounceable. Renounceable means that you can decide to decline your entitlement and then sell it to someone else. Non-renounceable means that you can’t sell your entitlement.
In this case, we have elected to make the offering non-renounceable. That means that in the case of someone who declines to take up their entitlement in part or full, then that unsubscribed entitlement goes back into a pool that the Company can allocate to other shareholders.

What does an entitlement to over-subscribe mean?
As a shareholder, you have an automatic entitlement to subscribe to a certain number of new shares. You also have an entitlement to subscribe for more than your entitlement.
In the event that there is a pool of unsubscribed shares, then you can ask for more than your automatic entitlement.
You will need to indicate on your subscription form whether you want over-subscriptions. Once the Offering closes on May 29 and the amount of Shortfall known, the Company Board will sit down and allocate the Shortfall stock.

Tell me about the Options
The Options are meant to provide you with an opportunity to benefit if the share price continues to be well supported. An Option simply is an option to convert it into a share at some point in the future.
If you subscribe to the Offering, you will receive types of Options.
The first kind of Option will need to be exercised by 29 November 2015. That is, within 6 months of being granted to you. The exercise (or conversion) fee will be AD$0.30.
To exercise, you simply fill out the Option Exercise form that you will receive next week and return that, along with your money.

The second kind of Option will need to be exercised before 29 November 2020. That is, within 5 years of being granted to you. The exercise fee for these Options will be AUD$0.40.
Options can be exercised at any time before their due date, and once exercised, the resulting shares are free to trade on the stock market.

Graham Kelly
Chief Executive Officer Novogen Ltd