FBR 4.35% 2.4¢ fbr ltd

Whilst I am extremely happy with the progress being made to...

  1. 205 Posts.
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    Whilst I am extremely happy with the progress being made to date, I keep thinking about the looming date when the company will have exhausted its current capital.

     

    I have read with interest the various comments made by contributors to HC as to what capital injection could be made by the likes of WB, BKW and Bechtel , however no one seems to have put out a possibility that the Board may also seek to raise additional capital from existing shareholders.

     

    I previously proposed the possibility of a Rights Issue and didn’t seem to get much feedback from readers. I still believe it is a real possibility, so I thought it would be interesting to start a new thread and throw out what existing shareholders would need to see, in order to participate.

     

    I think a Rights Issue is a real possibility for the following reasons:  
       

    1.      Capital will be needed to continue R&D, maintain the current infrastructure as well as invest in an initial fleet of assets. For illustration purposes, let’s assume it costs ~$22m per annum to run the R&D Programme and current Infrastructure, and $500k to put each machine on the road;

     

    2.       I believe WB’s and BKW’s interest is limited to securing their respective positions to finding a market for their products and not in the head entity (hence the announcement that BKW wanted to establish a JV entity). If we just look at BKW, I’d suggest in consideration for obtaining Australian rights (to flog their product), their contribution would be to fund 2 assets in each of the main states (say 10 assets) plus working capital for say 12-18 months. This is a commitment of around $6m;

     

    3.    I’m not sure whether The Board would want Bechtel to take a significant slice of the company by contributing the $50m+  I think would be necessary as part of the next cap raise; and

     

    4.       I believe the Board would be keen to reward loyal shareholders by allowing them to participate.

     

    Accordingly, I am currently positioning myself to have funds set aside should the company seek to make an offer to shareholders. If the news is good, I won’t have any problem injecting a fair wack of cash.   
      

    However, I’m interested in finding out whether any other readers would participate and if so, what would they need to see in order to participate.   
         

    From my perspective, if an offer was made to existing shareholders I would keen to participate if:   
       

    1.       FBR had executed agreements (not MOU’s) with WB and BKW;

     

    2.    The two existing machines are ready (or will be ready within 1-2 months of the offering) to build walls that meet all regulatory requirements (including building code specs); and

     

    3.       Sufficient capital is raised to fund the company’s R&D and Infrastructure for 18 – 24 months as well initial capital outlay to purchase the minimum number of assets to allow the company to at least breakeven in 18-24 months. By way of example in the model I previously explored with Spade of Aces, the Break Even Point was assessed at approximately 30 Assets.

     

    This is what I’d like to see to participate. Anything less and I may be more inclined to sit on the sidelines and simply keep the current shareholding I have.

 
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