re-birth of vdm group

HC Followers,

I suspect we are very close to seeing the re-launch of VDM Group.

The capital raising process is nearly complete and from all reports around Perth over the last few days, the money has been raised. I would suspect at the lower end of the range, so assume $28m.

The sale process for Cape Crushing is underway and we are now into week 2 of a 4 week DD process. The party looking at the asset apparantly knows it very well and will be a synergistic acquisition. They should realise ~$40m for this business. Although it produces solid EBIT contribution, VDM has struggled with the capital intenstity of the business.

Together with the capital raising and the sale of Cape Crushing, VDM Group will be in a solid net-cash position with cash backing of ~5c per share. The remaining construction business has been trimmed back to focus on core Australian resources contruction projects. The business has secured $100m of work whilst in suspension.

For those that can particpate in the placement/issue, you are getting access to stock at 5c per share (represents cash backing), with large potential upside from the turn-around in the construction business. You also have further capital protection from asset backing in the business from PPE.

It is hard to see a case whereby the shares are not worth 15c-25c within 6 months once management confirm that the remaining businesses are in fact profitable and it starts to win work. With the huge construction projects on offer in QLD (Gladstone port) and WA (Wheatstone in particular). VDM should emerge quite well.

I doubt holders of the stock from 6 months ago will be happy, but for those that participate in issue now, there is a good chance of a 3 or 4 bagger.

Andrew Broad is very well respected within VDM and has a loyal following of engineers and project managers. The dead-wood has been cut and the re-birth of a strong VDM Group is near.

Good luck.