OTCPK:KATFF - Post by User
Post by
topdopon Nov 09, 2019 7:56pm
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Post# 30332165
Deep Dive: three of three
Deep Dive: three of three
Unfortunately, and sorry, I am not a bearer of any good news. Infact I have to correct everyone as you all seem to have gone off on a tangent regarding the 5 day v.w.a.p. and Rights Pricing.
Issue Pricing is (always) done in the context of the market AFTER a deal is announced. That's how they work.
Read the Preliminary Short Form Prospectus. The deal price is based on the 5 day v.w.a.p. in the 5 trading days prior to release of the FINAL SHORT FORM PROSPECTUS.
This will be the one with all the bullets filled in. Price. Amounts. Etc.
The ONLY thing that may remain is the states 25% discount. Everything else will be significantly different (=worse): price, placement numbers etc.
For those that want to take issue with this method: sorry, it's standard practice. Sorry. It won't be pretty.
Here is the roadmap of another Rights Issue of a heavily indebted Mining Company: Lonmin 9 November 2015:
www.reuters.com/...
"With Lonmins market capitalisation down to 120m, the South African miner on Monday launched a massively dilutive rights issue in which investors can buy 46 new shares for each share they own. The price: 1p per share, or a 94 per cent discount to Lonmins 16.25p stock price on the eve of the issue."
Then the inevitable consolidation:
www.morningstar.co.uk/...
"Struggling platinum miner Lonmin PLC saw its shares take another hammering on Friday as it completed its 1-for-100 share consolidation after a heavily discounted and costly rights issue almost doubled its share capital."
Then the inevitable takeover:
www.bloomberg.com/...
"Lonmin shares were trading down 12% to 61.50 pence per share on Friday afternoon, having earlier hit a low of 55.00p.
"Lonmin completed a 46-for-1 rights issue earlier this month which was heavily discounted at only 1.0 pence per share, 94% less than Lonmin's closing price the day before the rights issue was announced."
"The deal values each Lonmin share at 86.3 pence and represents a premium of about 35 percent to its closing price on Dec. 13."
***
So a Rights issue at 1p then a 100 to 1 rollback then a takeout at (effectively) 8.6p (adjusted for rollback).
Not pretty for the old shareholders.
My conclusion is I think its unlikely we will see any significant take-up of Rights by current minority shareholders after which, if you do still keep your shares, a likely outcome would be a GLEN takeover at some point in the future at a regular, third party determined, Fair Value Bid. But without Minority Rights.
I have already recommend that everyone read the 89 page Short Form Prospectus. In you do you will find detailed technical updates on all the development assests and projects. From reading this legally required update, I do think KAT's assets will be strong and cashflow very able to sustain reduced debt in 36 months unlike Lonmin that was permanently crippled by its debt and could never recover. But for KAT, buy then it will be too late anyway and we will have had our share structure blown up.
So maybe GLEN pays a bit more in time? Who knows...
These are my views only. Thanks for reading.