I noted an interesting and serious point that was contained in "The Way Ahead For Dynasty" letter addressed to shareholders that had not been communicated to the shareholders before.
On the back page of the letter it states
" Ten weeks ago, Messrs Tay,Oh and Revell voted, despite the objections of Professor Gygar, to place 13.5m new shares(15%)of your company, with two unknown investors based in Eastern China at 18c per share. This placement was rushed through the Board, despite the objections of Professor Gygar, even though no meaningful information about the potential investors or the Brokers was given to the full Board and no investigation of the source of these funds was allowed.
This was a bad decision, because as Professor Gygar told the Board, a group of high profile Australian investors advised him that they would pay up to 25c a share for the same amount of shares and without any conditions."
Here we have a director of the company advising the Board that there is a group of investors that are prepared to pay $945,000 more for a parcel of shares in the company and it is not investigated in preference to another offer that is almost 40% lower. What is going on here?
The Chairman' letter prefacing the 2011 annual report contained this extract.
"The commitments on the Company's tenements significantly exceed its cash resources, and as a result, an active divestment program has been undertaken in relation to non-core tenements."
The Board is aware that they have a deficiency in cashflow to meet minimum expenditure requirements to maintain their tenements ($2.4 Million listed in the 2011 annual report) and they are not pursuing an offer that would have provided them with nearly a further $1 million in funding to meet this shortfall. As a consequence a divestment program is now underway therby further diluting shareholder value.
This is serious stuff and requires a full explanation by those directors that voted in favour of a lower offer.
DMA Price at posting:
18.5¢ Sentiment: Hold Disclosure: Held
