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Well well

AFR 15/12/20

The loan and consequent share option issue have produced an instant $1.67 million paper profit for iCar's two directors with the group at 42¢ per share.

This is ahead of a potential sale of the group at 50¢ per share that'd boost the profit to about $2.3 million.

ICar Asia said it established an independent board committee (comprising iCar directors not affiliated to Catcha Group ) to consider whether drawing down a $1 million loan was the best and most equitable way to raise funds, if it needed to raise funds at all, ahead of a possible takeover.

As a theoretical alternative, iCar could have issued 3 million shares by way of placement – say at 33¢ per share (the stock closed at 40¢ per share on October 30 on receipt of the takeover offer) – and created far less dilution, while giving more shareholders the opportunity to profit from the takeover offer.

Moreover, iCar has to pay the loan back to Grove's Catcha Group. Whereas if the board had decided to raise $1 million via a placement, it wouldn't need to be paid back at all.Shareholders would also likely have fallen over themselves to take up a placement around 33¢ given the 50¢ takeover bid, if iCar needed a quick $1 million.

At least management at local automobile classifieds player Carsales has saved shareholders some cash, with their 20 per cent plus iCar stake progressively sold down since 2014.

That's on the contrary to management at REA Group. Under former chief executive Tracey Fellows it progressively bought out iCar's Patrick Grove-founded and chaired stablemate iProperty Group.REA used cash and debt of about $580 million to fund its final acquisitive stake in that deal, which saw it persuaded to value iProperty at about $750 million.Since then the acquisition's value has twice been impaired – to the tune of $353.2 million.

Another win for Grove, in the tricky world of south-east Asian tech valuations.