RE: re oil and gas26 Aug 2013 19:23
Basically, nothing changes as a result of the consolidation. They are simply playing with numbers vs. Value per share.
However, the bit we need to have more visibility on they will not give us. That is, what price will they raise funds at?
So if they sell a load of shares immediately for face value i.e., 100p, then no impact on share price at all. There is no dilution as cash is exchanged directly for shares at market price. However, they aint gonna do that, as they warn the fund raising may be materially dilutive.
That is to be expected as investors won't give you a load of cash for nothing.
Im not absolutely sure how they pick a price. One could argue that any price materially below the market price directly after consolidation could not be in the interests of the existing shareholders. It would seem reasonable for them to expect a discount i.e. 20% which is not uncommon in placings, but 50%,80% or 90% discount? I'm not sure how the directors could justify that was in our interests.
So in short, the directors will ultimately tell us whether we are screwed after we all vote yes. But until the subsequent placing, we remain the only shareholders and the only people whose interests must be first in the thoughts of the board of directors. I would have no issue being kicked for 20/30% in exchange for a load of cash for investment, but at what point is it not worth raising the funds if it jus at totally wipes us out. In my eyes, a 20% discount on current price would seem fair for say £5,000,000 pocket money for investment.
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