Have you read today's corporate profile interview. This is the...

Have you read today's corporate profile interview. This is the chair and ceo trying to go into damage control. They say that 99% of the register holds less than 100,000 shares and that these people will be able to apply for 133,000 shares, well yiphee!!. If you held 100,000 shares, you would want to be able to apply for 450,000 to be pro rata, so the 133K goes nowhere - their crafted questions and answers are nothing short of disgraceful. They will pitch the reolutions on the basis that if shareholders don't accept then the company is out of business and the banks and receivers take over. i.e. we are over a barrel! So we will vote it thru, but following this the entire board needs to go for the disgraceful manner in which they a) let the company get into this position, and they did because they allowed the previous CEO to weave a masterful mess, and they only acted after the previous CEO had already blown himself, and the company, up! and,
b) Furthermore if there is any truth to the newspaper report that the company was offered an equity injection at 40 cents from a PE player, and they rejected it, then again they need to go. They never advised shareholders nor put it to shareholders, instead they drown us in 15 cent shares and put us over a barrel for approval of same. Shame shame shame!

They say, each shareholder will have the opportunity to subscribe for up to $20,000 shares at 15 cents. What they don't say is that they will allot your application up to $20,000. Why don't they say this, because there is a real possibility that there is not enough to go around. Do the maths;
number of shareholders as at date of last year's report 30,000 plus. at $20,000 each that would equate to $600m when there is only $150m allocated! There is every chance that with the demise in ELD share price that the register may even have expanded with the retail punters / daytraders, which clearly makes the situation worse.The smart arse investment bankers would have rattled on re the average take up in SPPs being 25%, but this is no normal SPP. All this volume we see now is existing shareholders selling to take up their 15 cents shares ( both institutional and hopefull intending SPP retail investors). Thus the take up on this SPP, given the discount and need to average down, is going to be well above average and the final insult will be our applications being scaled back.

Clearly the company's board is under attack from shareholders on this most dilutive deal. This will without doubt go down as the worst equity raising of 2009 as far as existing shareholder interest is concerned. They have swamped the register at 15 cents and without giving existing shareholders a real opportunity to take stock. This equity raising is the equivalent of a 4.5 for 1 issue at a 60% discount to pre issue price. The market has subsequently valued the company at $1.12m market cap, based on a price of 25 cents, and the new investors enjoy a likely immediate return of 66%. This is crook!

Had the offer been done at the original 25 cents price they would have issued 2.2 billion new shares (versus the 3.7b @ 15 cents)and based on the same market valuation the new share price would have been 37 cents. This would still have returned 45% to new shareholders. Forget the 25% return on the "theoretical ex issue price" the Chairman harps on about, the market has spoken and the new investors are enjoying 66%!!!! His dribble is the investment bankers justification of rape still echoing in his head.

I could go on for along time on just how attrocious this issue is, however I think the only proper course is to sell and make a mental note of the names of our trusted directors, because you don't want to invest in anything that they are associated with.