underwriters obligations, page-3

whatsup

WE don't have all the details and we don't know which path they will take (whether they have already placed the shares for instance) but really the $s involved are not that great ... that is the issue is at 8 cents and the share price is 7.7 cents. On the 100m shares they have to underwrite that's a total "loss" of $300k only even if the underwriters hang onto all the shares (this would be the amounf FAR may have to "indemnify" them for). Typically the underwriters will have already placed the shares and those that take them up will not be fussed by the share price difference given we are close to very significant news. Placementees often take the risk of a small loss but have the expcetation of a large profit (100% in this case by most estimates). That's why companies choose a placement over an enetitlement offer. The "sophisticated" part is in having the readies to handle the risk.

H