saudi arabians trounce alara. and placement???

Hard to see what is good about the deal announced on Friday. Looks like Alara was desperate to do a deal.

For an extra 10% of the project Alara is issuing 60m shares to their JV partner Manajem and Managem will become the largest shareholder of Alara with 20%. Plus Alara is also giving away control of the JV to the Saudi Prince as he is being written in as chairman of the JV in his personal capacity and not as an Alara Director. What happens if he resigns from Alara with 3 directors from each of Alara and Manajem left to fight it out on the JV?

Plus Alara has to pay $6,600,000 in cash to Manajem with most of this payable in the next few months. Alara had only $4m in the bank at the end of Dec and is burning $1,500,000 a quarter. So have about $2.9m left now to pay the $4.2m to Manajem and to keep the company going and funding all the work on the Saudi project.

Looks like a big placement is on the way and with the shares to Manajem there will be a big blowout of the shares on issue and lots of dilution for Alara's shareholders.

The Manajem people did a great deal for themselves and are taking an enormous amount of value in shares and cash off the table at relative values for the JV equity which are very, very unfavourable to Alara's shareholders. Manajem is selling its 10% JV interest to Alara for effectively $12m in cash and shares although they are valuing Alara's see through value of the JV at about $3.5m per 10% in the JV.

Manajem, take a bow.