reducing free float : register control...

Thiking out loud...

Capital structure:

Shares: 52,085,086 (currrent and proposed)
Options: 7,957,647
Total: 60,042,733 fully diluted

Substantial shareholders (subject to update)...

1. Verido Holdings P/L = 5,762,814
2. Destra Corporation = 5,000,000
3. Langsford Kim Louise & Langsford, Stepen Lewis & Frontiera Pty Ltd = 4,775,641
4. Illyria Pty Ltd = 4,036,300
5. Hodge, Simon James & Hodge, Lucy = 2,195,000

Outstanding placement: 10m shares

Directors get: 1,282,666

Balance goes to sophisticates = 8,717,334 (mostly top 20)

Potential new substantial shareholders: (after this placement)

1. Interstate Investments = 4,226,784 (previously held 1,726,784)
2. Equity Trustees P/L = 2,416,667 (previously held 750,000)

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Summary: (after placement)

Substantial shareholders (current) = 21,769,755
Substantial shareholders (new) = 6,643,451
Balance of placement stock (directors/sophisticates) = 5,833,333

Likely top 20 (in addition to above substantial shareholders and above placement...ie 13 holders) = 2,500,000

That gives us a total of some 36,746,539 shares which are effectively off the market.

There are also 3.7m shares in escrow (June 07)...but considering these are likely to be held by top 20, I will ignore their impact on the free float.

So, it appears that after the current placement is ratified and distributed, we have an assumed free-float of just...

52,085,086 - 36,746,539 = 15,338,547

So...we have about 15.3m shares potentially available in the free float...of course, many of these will be in the hands of non-traders.

Now this is where shareholder profile becomes important...a quick look at the charts shows an incredibly illiquid stock...this in itself suggest the vast majority of holders are long-termers.

This is a very good thing given recent corporate activity.

Of course, a fair degree of this would have been attributable to the simple lack of volume available...can't sell if nobody buying. This of course changed dramatically last Friday, as such the free-float would have experienced a temporary increase....to some degree on Friday, but mostly today as those holders likely to take advantage of the increased volumes (and price) had all weekend to action their sales.

It is likely therefore that today saw most of the selling from that part of the free float that has been stuck and simply waiting for an opportunity to get out!

So...going back over the trading history of this stock, it is likely that as few as 5% of the above mentioned free float might normally be expected to be traded on any given day (previous trading volumes suggest this)...but that currently, this may have seen a temporary increase to say 30% in the short term (mainly today?)

I personally think 30% is a bit high...but anyway, using this figure suggests about 4.6m shares are likely to hit the market as net selling.

For the sake of the argument however, even if we adopt a 50% free float release (highly unlikely), we still only get about 7.6m shares likely to hit as net selling.

So where am I going with this?

The significance here, is that if we take out Lachlan's on-market buys, we have seen some 11m shares change hands...between 2 - 3 times the likely free float!

Clearly we are seeing trading churn here...which can mean only one thing; the register is being "profiled" by someone, or some group?

The only reason anyone does this is for control in one way or another...either share price, or corporate, it makes no difference to the final outcome.

Nine out of ten times, such activity results in significantly higher prices and a shift in the company structure.

Final note...I'll be expecting a board appointment for Lachlan shortly, along with Destra representation.

Cheers!