re : announcemnt, page-2

Ordinary shareholders have no chances with this doggie. Any company worth its salt would have the revenue figure by the close of business on Friday. And what shareholders got was a little sideshow (of distraction) on the ASIC case which pales in comparison to the importance of satisfying the revenue covenant which determines the very existence of this company. IF CMQ had satisfied the covenant it would have been announced. Just like the previous year, a lot of behind the scene activities will determine the outcome.
To refresh the memory of some, previously Mizuho questioned whether CMQ had complied with the covenant and it took some time before the ASX announcement was made. We have never been told what Mizuho questioned but it must be very strange as Mizuho had a whole platoon of Mizuho-appointed managers in the company and still had to question CMQ. What chances would ordinary share holders have - wait & wait & wait?

On the revenue covenant, the delay in announcement is ominous for ordinary shareholders. The announcement could be a ‘receivership announcement’. EVEN IF (so many days after Jun 30th ) CMQ announced that it satisfied the revenue covenant, one should ask whether any ‘horse trading’ took place behind close doors. Were there concessions after concessions made to Stark?

The ASIC announcement is just a sideshow. Why did ASIC agree to the settlement?

This is my opinion why it was a very good outcome for ASIC. It is important for ASIC to establish a precedent case of a breach of continuous disclosure rule under the new CLER9 regime. With CMQ pleading guilty to 2 contraventions ASIC had achieved its goal as there is no necessity to get convictions on all the remaining incidences.

The trial could take a year or 2 to complete and there is a real possibility CMQ may not be in existence to complete the trial. ASIC must be acutely aware of CMQ’s precarious health with the dateline for the Stark covenant at the doorstep. So why continue the case with the chance that the company may go under before the trial ends without a conclusion? It is common sense to get the guilty plea today (2 birds in the hand is better than 8 in the bush) and in any case all ASIC requires is 1 conviction to set a precedence.

Are there any other possible reasons why CMQ agree to the settlement other than what was in the announcement?
CMQ sp is in deep decline and in danger of failing the 30 cents support level. Obviously this ‘apparent good news’ could lend some support! And with the overwhelming evidences supporting the ASIC charges, 2 admitted default is better than to fight a loosing 8-charges case. In addition, ASIC may be considering additional charges from evidences discovered in the process. And what better sideshow than this to take the eyes off the all-important revenue covenant?

Cheers.