this is just wrong!!, page-2

mycall101,

I agree with you absolutely. This is our company and these are our assets. We should not allow what we have paid so much for to be taken away from us. Lets formulate a formal complaint, send it to ASIC and have this highway robbery stopped.

The ASX Listing Rules clearly state that:

"There are no restrictions on the number of shares that can be issued on a pro-rata basis through a renounceable rights issue, or on the discount that can be offered on the share issue price under such issues. There is, however, a limit on how much can be raised through a non-renounceable offer (ie no greater than a 1:1 offer ratio)."

However, on page 6 of the GXY pro-rata non-renounceable right issue announcement released on 24 May it states:

• For every 2 shares subscribed, applicants will also receive 3 free attaching new options exercisable at 8¢ with an expiry date of 31 December 2014 (options are to be listed).
• Shareholders will have the ability to apply for additional shares and free attaching options in excess of their entitlement.
• The Offer price represents a 65% discount to the last traded price of 23¢ and a 48% discount to the Theoretical Ex Rights Issue Price (“TERP ”) of 15.5¢

Consequently, a person or entity with any holding could acquire a large portion of the company very cheap by receiving bonus 8c options and by being issued with additional rights (which would provide them with more 8c shares and more 8c options).

Clearly this is not one-for-one and not pro-rata. It should not be allowed because it potentially could facilitate someone (or a shareholder pact) to acquire control of the company, takeover the company, and/or prevent a takeover offer from being made by another company via a public offer.

This is clearly not in the interest of GXY shareholders and is not what non-renounceable rights offers are intended for. In fact, the one-for-one restriction, placed on non-renounceable rights offers, is intended to prevent this from happening. For that reason this rights issue should not be allowed in it current form and the one-for-one requirement should be strictly enforced.

The GXY rights issue has been discussed widely on the internet by the investment community including GXY shareholders. There is a strong belief that the rights issue is intended for transferring both ownership and control away from existing shareholders and toward someone with a desire to acquire the company, as explained below.

It is obvious to shareholders that the large number of free 8c options, to be given away with the rights issue, will immediately ramp the share price down to below 8c when trading commences. Consequently, this makes the rights offer unattractive to investors who are likely to be out of the money when both the shares and options open for trading.

However, someone with intent to acquire the company (alone, or with help from friend shareholders, or a shareholder pact) can acquire ALL the unsubscribed rights. This is because there is no limit on how many extra rights they can apply for. This potentially could transfer considerable ownership and facilitate a takeover at a very low price.

Long term shareholders will be devastated if ASIC allows this unusual and questionable pro-rata non-renounceable entitlement offer to proceed, and it then turns out to have allowed someone (or a pact) to acquire a large number of shares at 8c (65% discount to the last traded price) and effect a takeover.

This could be prevented by imposing following measures:

• Keeping the rights issue strictly one-for-one (i.e. with no bonus options and no privilege to obtain additional rights issues).
• Increasing the exercise price of the bonus options to above the TERP.
• Reducing the number of bonus options allowed to be issued.
• Considering the rights issue to be not non-renounceable and not pro-rata and requiring a 75% majority vote before it is allowed to proceed.