Thank you for your text book answer. Expect nothing less. And...

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stockrock

2,741 Posts.

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07/03/18

15:08

Post #: 31593094
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Originally posted by madamswer ↑

You should know that fully renouncable offers are slow and expensive, a full prospective is required by the Corps Act.

They are not that slow in the context of any company's cash flow budgeting process: usually the capital from the institutional component is receivable within 5 trading days, while the retail take-up can take anywhere between 2 and 3 weeks. By comparison, all companies worth their sale will be making annual cash flow forecasts out 12-months for budgeting purposes, with detailed forecasts for the next 3 months. So the time factor is really a non-issue.

As for the cost of entitlement offers, the AS$50m raising MSB did last year was done at fees which amounted to 4.9% of the capital raised. Had MSB raised $100m, the percentage cost would have been closer to 4%, and probably less than that.

MSB have indicated that they are happy to pay a rate of 4.5%, as per the Kentgrove agreement.

For further context, MSB paid away a full 9.7% in fees, of the capital it raised as part of the NASDAQ listing.

So there is nothing prohibitive at all about the cost of en entitlement offer compared to whatever other ways that MSB has used, or intended to use, to raise capital in the past.

Also, it will be very interesting to see what the extent of the "Loan Establishment Fees" are with which Hercules would have slugged MSB.

"They are also usually offered at much higher discount than say a SPP (the long duration means there is equity price risk attached)."

If its an entitlement offer, which is fully renounceable, it makes zero difference what the discount is, because all shareholders are being treated equally... which is the entire point of the exercise.

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Thank you for your text book answer. Expect nothing less.

And shame on every other ASX listed company for not doing as you suggested.

In the meantime reality continues for MSB.

Feel free to continue to debate an alternate reality.

Last edited by stockrock: 07/03/18

MSB Price at posting: $1.92 Sentiment: Buy Disclosure: Held
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