Is it worth taking up the rights issue?In the worst case, note...

Is it worth taking up the rights issue?

In the worst case, note holders will be able to convert notes at .001, or maybe .002 and then they will have over 50% of the company and therefore control as to what happens to it.

In the best case, if there is good news before they convert and the sp rises they will be able to convert at 90% of lowest price at the end of any day which might be quite a bit better better than .003.

If no good news in the next fortnight or so to raise the sp and encourage holders to take up their rights, it's likely only a minority of shares will be taken up by current holders. The "investors" will likely get the ones not taken up. They can also convert notes at any time and would (one assumes out of their self interest) do it at the lowest possible price, ie .0009 and then with the notes converted they will likely have up to 75% of the company. A take over bid could then be expected. If enough holders accept the bid to get them over the 90%, they can compulsorily aquire. With a good offer at a substantial margin above the sp, they'd probably get enough.

Curtains for current shareholders!

No point selling out now at .002/003 though! You would, I'm pretty sure get more than .002/003 for your shares in a takeover - so as a counter to the above, there is actually some incentive to take up the rights issue as you will probably make a bit on the new shares in the worst case, even if not a fortune.

If the notes are not converted quickly at the lowest possible price (you never know, they might not!) then MST will have, hopefully, sufficient funds to make a good go of it and there could be good gains above the current sp for all holders. However, there is probably not a great prospect of making up losses of the order of 100-1 or even more if you are a long term holder.

All in all, imo, it's probably worth taking up the rights issue if you have the cash and are not heartily sick of the whole thing!