the game afoot., page-5

Disclaimer !! - All comments in this post are my personal thoughts and no investment advice is given - in reference to the rights issue any comments in regard to what I might personally do are to suit my trading style - Other holders may wish to assist the company by providing cash in taking up their entitlement - that view will not be an issue if the entire $85m is underwritten.

Firstly I agree with Fluffy-nymph this seems bizarre and little left field to me given the company was angling towards debt funding and had given strong indication that they were not entertaining issuing any more shares at these low prices - Then was a change of heart with a teaser in the full year financial report that they were again "considering" a placement as well as debt funding- We all remember a similar backflip when the company said it wasn't considering raising cash post JORC at $2.20 then placed 10m at $2 a short time later to M & G.

It was only a short time back when W.M said they were $50m under budget and that DSO and NCU sales were on the table that posters here were spruking CDU was now fully funded !!- Then the company said they had secured debt funding for $105m and the same posters were flag waving that it probably wouldn't all be used and it was basically prudent to put in place a line of credit for more cash than you need.

Now we have $84m placement at $2.50 to go with the $105m but then another $84m to come in at the end of 2015 - presumably that $84m wont be required and will go towards paying out the $105m loan.

It now appears that my $400m "conjecture" number was on the money. In the rights announcement it says the last cap raising was $3.40 and imply's $2.50 is an attractive price in relation to the last 12 months placement range of $3.40 to $4.30.

I have looked up the last 2 CDU 3b notices and the issue prices were . $2.50 to employees and contractors on September 16 and $2.60 for the Crane contra deal on the 8th of July . I would have liked to have seen in the announcement that all 7 directors were intending to take up their full entitlement as that would have been a huge show of faith and provided strong guidance to the retail punters. I would expect the top 3 Chinese holders to take up their full entitlement.

Curiously Azure appear to have got the coke and sars ? and a new chinese underwriter has stepped up to the plate with another possible $50m / $84m going to Chinese on the CDU register in the event of low interest in rights issue.

Personally rather than take up the rights issue I would buy stock now at $2 and sell the free rights on market in the 2 week window - I would also look to day trade the listed rights and the options when they are trading.

The other scenario is I cant see the S/P going much above $2.50 because punters would sell the heads to to replace them with the rights - anything above $2.50 ( less brokerage ) is a stag profit.

thats enough for now more later when i get my head around things a little more.


hOOt