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  1. #1831
    On the doghouse
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    Default Who really should feel aggrieved at the SPP? part 1: Shareholders

    Quote Originally Posted by horus1 View Post
    I am making a formal complaint re the different wording on page 3 and 12 and have advised the the company via the above link . They should honour the most advantageous condition for individual shareholders as per page3 or 12. This is plainly very sloppy and they shouldn't get away with it. Where were there lawyers and banks.
    I got 61% of the dollar amount of shares that I applied for. Not up there with the foundation holders like Paul Byrnes who got nearly all he asked for. Or even the 'Fat Cats' like Percy. But I will happily bask in the glory of being a 'Mildly Obese Cat' for SPP purposes. So where do I stand on the scale of aggrievement?

    No. of Shares EOFY2107 74 523 527
    plus No. of Shares in Placement (based on $25m pool at $3.02 per share) 8 278 146
    plus No. of Shares in SPP (based on $5m pool at $3.02 per share) 1 655 629
    equals No. of Shares (After Placement and SPP) 84 457 301

    The ratio of 'New Shares' to 'Old Shares' is:

    84 457 301 / 74 523 527 = 1.133

    So by my reckoning, anyone who got more than 13.3% in new shares compared to their previous total, has not had their share in the company diluted. I have now got 14.6% more shares than I had before this exercise. So I guess I came out well, (helped by my holding of bonds of course).

    SNOOPY
    Last edited by Snoopy; 20-10-2017 at 06:22 PM.
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  2. #1832
    On the doghouse
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    Default Who really should feel aggrieved at the SPP? part 2: Bondholders

    If we come to the bondholders, who want a good fixed interest bond, I don't see much cause for complaint.

    These bondholders are still set to get all their capital back at bond maturity time. There is no change to the bond income as a result of the issue of new shares. One might argue that the new capital raised means a stronger balance sheet and so the risk of the bond capital not being repaid has been reduced. Granted the new capital is meant to fund expansion. So by the time the bonds roll around for repayment this new capital may have already been spent. The option to buy new TRA shares just because you were a bond holder was an unexpected freebie. The problem here is that if you had say $10,000 worth of bonds (a reasonable holding), this would entitle such a bondholder to a number of new shares, based on the equivalent of holding :

    $10,000/ $3.75 = 2666 shares

    Using the actual pay out rate of some 13.3% to avoid 'dilution', such a bond holder might expect to get:

    0.133 x 2666 = 354 shares

    If the shares are selling at $3.20 each on market after the issue, and the application price was $3.02 the expected profit would be:

    354 x ( $3.22 - $3.02 ) = $70.80

    Take a minimum brokerage figure off that $70.80 and there isn't much profit to be made for the bondholder. But the equation changes if you are also a shareholder. Because your small quota of bond eligible shares can be added to a much larger total. And that makes this kind of short term arbitrage possible, if that is what you as a shareholder want to do.

    SNOOPY
    Last edited by Snoopy; 20-10-2017 at 06:24 PM.
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  3. #1833
    On the doghouse
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    Default Who really should feel aggrieved at the SPP? part 3: Optionholders

    People who own the bonds will know that holding 'bonds' and holding 'options' that convert to shares is one and the same thing. TRAHB bonds can be thought of as either bonds or options depending on the owners mindset.

    For those that think 'options', the biggest benefit will come as the TRA hare price rises above $3.95. Above $3.95, the 5% discount at conversion equates to $3.75. $3.75, it has been dictated, is the maximum conversion price that option holders will pay. If the share price rises higher than $3.95 this increases the discount conversion price to more than 5%, and such an increasingly juicy discount has extra value. The problem is that in the long term a higher share price can only be justified by increasing earnings per share. If a lot of new shareholder capital is issued, such as has just happened, this will reduce earnings per share, at least initially. If this new capital is deployed in such a way that it becomes 'earnings per share positive', then this new capital will likely have the effect of increasing the share price in the longer term. The problem is that 'in the longer term' may mean further out than September 2018 which is when the options convert. It is far from clear that this new share capital has increased earnings per share, and in the short term at least, it is almost certain that earnings per share has been reduced. This means there is a good chance that possible 'super profits', from a conversion discount of much more than 5% have now evaporated. This is a negative.

    Furthermore, due to relatively poor TRA share liquidity, it is far from clear whether the option holder will be able to sell their newly issued shares at a premium by arbitraging the market price against the issue price. I should point out here that you can't lose money on this arbitrage because the back up option of simply redeeming the bonds for cash still exists. In truth I am not sure that those assuming the share price would exceed $3.95 by September 2018 were living in a fantasy land. Granted an irrational exuberant market might yet price the shares there. But even pre the recent share issue that would have been a lofty multiple, and probably an unrealistic expectation.

    Option holders, like bondholders, still received the chance to receive new shares with the SPP in a way that was not envisaged when they signed up to the bonds. Whether that was enough to compensate for the probable erosion of the 'super conversion discount' is likely a matter of opinion.

    SNOOPY
    Last edited by Snoopy; 20-10-2017 at 06:53 PM.
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  4. #1834
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    Thanks for the analysis Snoopy. I have some bonds, quite happy with the 6.25% return while they look after my money. At the end of their term, I hope to convert to shares. But if not attractive, will either take the cash, or if available, I suspect their may be a replacement bond issue to roll over into if I am still confident in the progress/stability of the company. Which ever way it works out, happy holder.

  5. #1835
    Investor
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    Hmmm...this one is not moving anywhere eh....trading currently cum 3c divvy and price at best stagnating or dropping few cents.

  6. #1836
    percy
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    Quote Originally Posted by sb9 View Post
    Hmmm...this one is not moving anywhere eh....trading currently cum 3c divvy and price at best stagnating or dropping few cents.
    Bit surprised myself.
    I would have thought once the SPP was out of the way,there would be more buying support.

  7. #1837
    Speedy Az winner69's Avatar
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    Quote Originally Posted by percy View Post
    Bit surprised myself.
    I would have thought once the SPP was out of the way,there would be more buying support.
    big end of town not buying more ....hmmm
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  8. #1838
    ShareTrader Legend Beagle's Avatar
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    Is that really a surprise ? They drill down into shareholders pockets every year in one form or another either through placements, share issues or convertible note issues and then deliver very mediocre EPS growth. On top of that a major shareholder has been selling down and we've just had a SPP plan to mop up retail investors money. Any wonder the well of support is running a bit dry ?
    Youi can only squeeze so much juice out of an orange and these guys have squeezed hard and often. Maybe the market is telling them to stand and deliver or else, certainly you'd be forgiven for thinking that looking at the SP graph ! The lack of support and lack of liquidity in the shares, (which is by no means just a recent phenomenon) is one of the main reasons I remain extremely cautious regarding this company. The other is the manner in which they talk about growth with never a single mention of the modest true EPS growth.
    Last edited by Beagle; 25-10-2017 at 12:14 PM.
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  9. #1839
    Following the momo
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    Voting with my feet!

    I have just completed selling my holding in this company following my recent correspondence with Todd regarding the scaling of the SPP plan.

    After confirming my assumptions on the scaling, it was clear that the process wasn't transparent and fair to all shareholders. The methodology around the scaling allowed it to be effectively 'gamed' to the disadvantage of shareholders* who either just held or sold shares between the record date and allotment date (as shareholders who added either in the Placement or bought on market between those dates got a greater share of the $3.02 SPP shares as an allotment date was used as the reference for scaling - which included the newly purchased discounted shares).

    * That took up their full entitlement of $15k

    This doesn't sit well with me and the only thing close to an apology from the company is them saying a Rights issue would be a better solution next time.

    On top of this (and as mentioned in a previous post) I feel that the price will be range bound for some time as sentiment in the company is very low. So I made the decision to cut TRA before the dividend as I can't see a catalyst in this stock to change the current momentum. If buying strength is weak prior to the share going Ex-dividend, I wonder what it will be like after? Possibly testing 12 month lows?
    Last edited by McGinty; 25-10-2017 at 05:24 PM. Reason: Spelling correction

  10. #1840
    percy
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    Default

    With so many negative posts it must be near buying time again..!!..lol.

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