Appendix 3B on 31 December, 2008 showed there were 121,721,803 shares on issue for CQU. Now the Board wants shareholder approval to issue 21,480,318 shares to Equity Capital Partners and further 1,066,666,667 shares by means of a convertable note. If both these events transpire, Equity Partners will end up with 89.94% of the Company and existing shareholders a mere 10.06%. For the Board of Directors to give away 90% of the Company for 8 - 13 million plus dollars requires a detailed explanation, not just shareholder approval. No wonder Lazard Carnegie Wylie want their money back. (This figures ignore shares issued as part of a rights issue as no details of this proposed issue have been given).
Now the current Executive Chairman of CQU is also MD of Investor Capital Partners. The relationship between Equity Capital Partners and Investor Capital Partners is unclear. If they are related they he must have a huge conflict of interests. Maybe it is just coincidence that they share the name "Capital Partners".
The Board attributes part of the blame for poor performance to "operational execution". I.e. to William Scott as MD at the time. If he is to get 6 months salary as a reward it does not seem fair to shareholders.
I urge all shareholders to write to the Board of Directors seeking an full explanation as why they are proposing to dilute current shareholders 9 times. Seek verification that the Current Chairman is independent, seek clarrification of what assets have been sold to "insiders" and question the final payout to William Scott.
CQU Price at posting:
1.5¢ Sentiment: None Disclosure: Held
