PET (ASX) News: PET Phoslock Environmental Technologies Raised $12 Million At 50 Cents Per Share

Originally posted by Mickem: ↑

hi johny
just trying to understand the angle you are coming from. You want the retail offer increased ? Ie so people can apply for more than the 60k shares, because this is capped at the 60k you aren't applying? So not even taking up what you can get .
If the company didn't sell some to the Insto and just tapped up the current holders apart from i don't believe they would raise the $17m ( combined Insto and retail) more questions would be asked. I for one and a presume Kev would also like to know, couldn't they attract Insto, even if they said no we wanted to give holder free range first and then go to Insto we would not believe them and recon things don't stack up that's why they didn't go to Insto
I will try some math again so hopefully a don't stuff it up again. We have about 550m shares and issuing another 40m roughly 7.5% of issued capital, being fair to everyone then say you can apply for 7.5% of your holdings but that will not work as some will not take up their offer , so not enough raised then what?
People worried about delution you have the opportunity to put in more money so you aren't diluted, your choice, unless you hold over 800k shares you have the choice to keep your percentage of the company at it current level. Perhaps all holders over the 800k shares have a right to complain they should be allowed more.

however companies do cr some will always be unhappy, percentage of your holding don't work. Fixed amounts don't work , why should someone who owners 10k share be able to buy the same amount as larger holders? . Why Insto first ? If holders first then as above wasn't Insto interested, if holders first then Insto might say well they could not raise the funds from holders so why should we put in and if you want our money then We want more discount?

anyway management job isn't to please everyone, they need to run the company best they can and it looks like are about to raise over $20m in difficult times. I think that's brilliant

thanks
mickem

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Hi Mickem

I can't disagree with most of what you say here (and most times, thanks for all your work) but your comment on how to avoid being diluted doesn't work.

To take up your full allocation of shares at 7.08% (dilution percentage at 40M new shares) you would need to hold around 850,000 shares.

So, lets say I have 850,000 shares worth $484,500 at toda'ys SP and take up my full 60K allocation.
After the new shares have been allocated, my original 850,000 shares would be worth 7.08% less than pre CR or $450,197.4. This is simply due to the fact that you now own a small percentage of the same pie. Regardless of what the market values the company at in the future, you now own 7.08% less of that company. That's what dilution is.

Buying new shares does nothing to diminish the dilution of you former holding. You have just spent $30,000 to bring you up to your previous position in percentage terms. You have spent $30,000 simply to maintain the percentage of your holding in the company, or if you like, to maintain the value of you pre-CR holding

End results are either 1: Do nothing and lose $34,302.60. 2: Take up your allocation to maintain your previous position at a cost (or loss if you like) of $30,000. You hold the same percentage of the company and it has cost you $30K to do so.

These numbers say nothing about what the company may be worth after the funds are used and they say nothing that will help you make your $30,000 investment decision. They simply reflect the dilution effect, in cash terms, at today's market price. If the funds are well used and we get a great return on the equity, the value of the company may, say, double. That does not, and never can, undo the dilution of your original holding. It does mean however, that you have made a very good investment. Your $30K is now worth $60K, and this is what people must look at when they are deciding whether to take up their allocation. Can I either 1:make a quick buck by buying below market price and selling at market? or 2: make money on my investment by holding because I believe that the funds will be well used and add value to the company? You are deciding whether to invest, not trying to undo the effects of your very real and very permanent dilution.

Hope that makes sense.

Cheers