the cmi story, page-11

Hi LZA,

Thanks for joining me. It can get lonely here.

In coming weeks I plan to do some posts highlighting some of the unusual things that have happened at CMI Limited since Ray Catelan came on the scene and I will start with some of his share transactions.

On 19 May 2009, CMI announced to the market that Ray Catelan had sold 500,000 CMI ordinary shares to each of his fellow directors Danny Hercek and Richard Catelan at 43c a share with the transactions taking place on 15 May 2009. Danny Hercek was nominated to the Board by Ray Catelan. Richard Catelan is Ray's nephew.

On 21 May 2009, CMI issued a very pessimistic market update. Within two weeks, the ordinary shares fell to 28 cents and Ray Catelan was buying them. Here is the link to the announcement:

May 2009 Market Update

The announcement included comments such as ?significant exposure to deteriorating markets?, ?limited profits?, ?downward pressure on share pricing?.

Between 5 June 2009 and 7 July 2009 Ray Catelan posted five separate shareholder notices in which he increased the holding of ordinary shares under his control by 1,472,787 ordinary shares which represents 4.36 percent of the ordinary shares on issue. The Corporations Act limits shareholders and their associates who own more than 20 percent of voting shares to new purchases of 3 percent or less in any six month period unless it is by way of a takeover bid. Because of the earlier sale of shares to Hercek and Richard Catelan, the increase in Ray Catelan?s personal holding of ordinary shares during this period was under 3 percent.

I don?t think it is unreasonable to ask why Danny Hercek and Richard Catelan would buy 500,000 shares each at 43c a share six days before the downgrade when one can presume they were aware of all the bad things that we were told were happening at the company.

I also don?t think it is unreasonable to ask why Ray Catelan starting buying shares just ten days after the announcement of 21 May 2009 if things at the company were so dire.

In the annual report produced in September 2009 it became clear that things weren?t so dire after all. The chairman made the comment ?CMI is now positioned for a solid period of performance?. The directors were certainly very fortunate to have bought all of those shares in the interim.

GPASAS