uneasy about prior disclosures., page-2

RON, where does it say that AAM have been trading insolvent? A lot of the debt is owed to Watpac (and will be reduced from some $16m to 13.5m), who have had a floating charge against AAM's assets. No big deal there- if AAM was unable to pay the debts, or interest upon such debts, then Watpac could have acted. This has been averted with Stone's intervention. Stone will then have the same deal- rights to the assets- which it has also said it will not invoke, if certain conditions are met. Basically, Stone seems to want to be a shareholder/controller- not a creditor. That's what it looks like to me.

I've seen similar arrangements. I *think* it was similar with CRE (FML olders will correct me on this, I'm sure), and it was similar, I recall, with BCD: small companies have debts, and a new company comes in, injects funds/raises capital, and either releases debt, or takes over the debt, and keeps a mortgage over the indebted company.

Stone is a white knight. Happens all over the ASX. Some would say Stone are getting control of the company without a control premium. However, if Stone are to convert a 2.5c note @ 3.5c in a year, or 6c thereafter, and the SP reaches that, then there is the control premium (40% over 1 year @ 3.5c). I suspect that Stone expect the SP to reach one of those levels, or they wouldn't have subscribed. Given that they will have Directors on the Board, they should be able to make that happen.

If the proposals don't go through, AAM might have trouble paying their debts, raising capital, etc. That's all written down. So many of the reports I have read from ASX companies recently, have the companies at risk of continuing as agoing concern- that doesn't mean they are trading insolvenet- just that they may not make it through if they don't find loads of cash.

I am not a shareholder, but I think I will be soon.