There has been a wide range of views posted on hotcopper in the last few days. Over the years I have met many holders and exchanged details, like many of you I have questioned this deal, and my inbox now resembles these threads!
Since the AGM I have had many conversations with many of you and rather than post as I conducted my review I have thrashed this out with shareholders and all of our directors over multiple meetings and phone calls. My assessment of shareholder feedback is that many people simply do not understand the commercial structure of the deal. I'm not an accountant, i'm not providing financial advise, I simply offer the following view that is my understanding of the deal. Everything else to me is noise, I have no issue with the valuation of N.S. The fee for John's practice, etc. it's all part of the process and immaterial in the bigger scheme of things. The only material item, and most mis-understood (or at least lost in the noise), is the deal to construct Wellfully itself and the difference that the parameters of the deal make.
The main parameters that are not yet determined are:
- The amount of capital raised
- The amount of debt used
- The amount that current OBJ shareholders participate in the capital raising
- The share price in 12/24/36 months
- Whether we pay Danny in 12/24/36 months with equity or mutually agree to use cash from earnings
I have built a basic spreadsheet model to allow me to flex these parameters.
I will email this spreadsheet to the 54 contacts that I have gathered over the years. if someone finds a calculation mistake please post so. again this is not financial advise - run your own analysis and make your own decision.
Here are a couple of screenshots with various scenarios.
In the left hand side of the screen you can see the parameters used in the model and on the right hand side the resulting share allocation in Wellfully in 3 years time AFTER Danny has been paid the full quid, assuming he hits all his targets:
First scenario, OBJ raises $30m (uses $20m debt to fund the balance of first $40m payment and $10m to grow), we chip in $1k each. The company grows, Danny gets issued all $35m shares in his upside
this is a likely scenario if you agree with the strategy. Importantly the big parameter here is use of debt. We have over half of Wellfully
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
Column 6 |
| 0 |
Deal Parameters (key into green shaded fields only) |
|
|
Share Distribution in Wellfully in 3 years |
|
|
| 1 |
Capital Raised (need $40m cash up from, can use debt) |
$ 30,000,000 |
|
OBJ Shareholders |
New Shareholders |
Danny |
| 2 |
Number of existing OBJ holders |
4,600 |
|
|
|
|
| 3 |
OBJ holders participate in raise (Average per OBJ holder) |
$ 1,000 |
|
|
|
|
| 4 |
Existing OBJ Shareholders participate in raise |
$ 4,600,000 |
|
|
|
|
| 5 |
New Shareholders participate in raise: |
$ 25,400,000 |
|
|
|
|
| 6 |
Share Price in 12 months (Jan 2021) |
$ 1.00 |
|
|
|
|
| 7 |
Share Price in 24 months (Jan 2022) |
$ 2.00 |
|
50.2% |
40.3% |
9.5% |
| 8 |
Share Price in 36 months (Jan 2023) |
$ 3.00 |
|
|
|
|
| 9 |
Amount of Danny's $10m in 12 months paid as equity |
$ 10,000,000 |
|
|
|
|
| 10 |
Amount of Danny's $10m in 24 months paid as equity |
$ 10,000,000 |
|
|
|
|
| 11 |
Amount of Danny's $15m in 36 months paid as equity |
$ 15,000,000 |
|
|
|
|
Let's say we raise $40m (we need $40m for deal, so use $10m debt to kick off Wellfully) - and not 1 shareholder participates.
So if everyone ignores the capital raise and growth is slower we still have 34%
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
Column 6 |
| 0 |
Deal Parameters (key into green shaded fields only) |
|
|
Share Distribution in Wellfully in 3 years |
|
|
| 1 |
Capital Raised (need $40m cash up from, can use debt) |
$ 40,000,000 |
|
OBJ Shareholders |
New Shareholders |
Danny |
| 2 |
Number of existing OBJ holders |
4,600 |
|
|
|
|
| 3 |
OBJ holders participate in raise (Average per OBJ holder) |
$ - |
|
|
|
|
| 4 |
Existing OBJ Shareholders participate in raise |
$ - |
|
|
|
|
| 5 |
New Shareholders participate in raise: |
$ 40,000,000 |
|
|
|
|
| 6 |
Share Price in 12 months (Jan 2021) |
$ 0.50 |
|
|
|
|
| 7 |
Share Price in 24 months (Jan 2022) |
$ 1.00 |
|
34.2% |
50.6% |
15.2% |
| 8 |
Share Price in 36 months (Jan 2023) |
$ 1.50 |
|
|
|
|
| 9 |
Amount of Danny's $10m in 12 months paid as equity |
$ 10,000,000 |
|
|
|
|
| 10 |
Amount of Danny's $10m in 24 months paid as equity |
$ 10,000,000 |
|
|
|
|
| 11 |
Amount of Danny's $15m in 36 months paid as equity |
$ 15,000,000 |
|
|
|
|
i'll keep this post short.
For 14 years we have drifted along, we finally have a quality team that have put together a good deal and have the capability to deliver. I will be voting YES for the deal. i am very comfortable with my investment and believe the vision of the board. If this fails to get up to be frank we've got nothing left
(20min delay)