MRV 0.00% 0.3¢ moreton resources ltd

The Compelling Case for a Change of MRV BoardAfter seven months...

  1. aje
    89 Posts.
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    The Compelling Case for a Change of MRV Board

    After seven months the incumbent MRV board still struggle to generate change, positive sentiment or shareholder value. Detailed below is a summary of critical issues and the board’s poor performance.

    • 80% decrease in market value - Since March 2013, the MRV share price has dropped from 0.5 cents to a current offer price of 0.1 of a cent in the proposed Inferior Funding Deal. That is an 80% decrease of market value.

    • 66% drop in seven weeks of share value - In August 2013, a capital raising was undertaken with existing and new shareholders at a price of 0.3 cents per share, representing a 21% discount against the 1-Month VWAP of the Company (Capital Raising). The proposed Inferior Funding Deal now effectively values shares of the Company at 0.1 of a cent. This decrease in share value is a fall of 66% in just seven weeks following the first week of the Capital Raising. Accordingly, while the long term shareholders received only a 21% discount under the Capital Raising, the directors have effectively granted the foreign investor a 66% discount under the Inferior Funding Deal.

    • MRV valued at just $2.5 million - Under the proposed Inferior Funding Deal, the board has effectively valued the entire Company at $2.5 million by offering up to 1,225,000,000 new shares at 0.1 of a cent. This value does not take into account the cash value of outstanding bonds and outstanding R&D grants owed to MRV, which is understood (from representations of the Chairman) to have a value of between $4-6 million. This means that the incumbent MRV directors have effectively valued the entirety of MRV assets as NIL and the expected cash due, at a 50% discount.

    • Superior funding deals were not secured - Alternate superior funding deals should have been duly considered and secured. Such alternatives were being presented to the board only weeks prior to the Inferior Funding Deal, that would not have offered 40.8% of the Company to a new foreign investor. It is understood that this investor has a close association with an incumbent board director. We have grave concerns about whether the standard of due diligence which a prudent board should have given to the Inferior Funding Deal, was given by the MRV board. When the Chairman was queried about the Inferior Funding Deal (following its execution) he expressed that he did not know certain particulars of the deal, including the identity of the actual investor, or its background or how the deal would strategically benefit the Company.

    • Additional onerous provisions in the Inferior Funding Deal – Additional onerous provisions have been agreed to by the directors under the Inferior Funding Deal such as; a 25% break fee, a 12.5% coupon rate per annum and the allocation of a 100,000,000 shares. Shareholders who have seen similar foreign investment deals, will be aware of the general 1% break fees position and that the proposed deal is 25 times the market trend of 1% break fees.

    • Missed opportunities could have protected MRV share price - Critical company opportunities and timelines that should have been pursued, enacted and met by the Company were not. In particular, activities such as securing alternative funding, scoping studies, coal qualities, securing of returned bonds and R&D grants, along with sale of fixed and mobile Kingaroy assets, all could have been pursued. Opportunities missed by the Company (if pursued) could have protected the share price and brought much needed critical funds into the Company well before now.

    • Lack of transparency by the board – In addition to the failure to properly disclose the relevant particulars of the foreign investor, the board is unable to advise of what attempts were made to finalise other funding options. Further, the board (despite requests to do so) has failed to state if they did in fact spend the shareholders’ money on the committed items for funding in August and are unwilling to itemise expenditures. With $1.75 million already raised in the six months prior, itemising expenditures and disclosure should be pertinent at this critical time.

    These details are a very high level reality of the facts that pertain to the need for change. An email account has been set up that will distribute a lot of material for those whom are interested. It will be facts only, not an interpretation, eg copies of documents, email, recordings so that you can make up your own mind about all of this....

    The deal is one thing, those that made the deal should consider if it was the best for shareholders, that is the job of a board....

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