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share issue, page-2

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    Hi Blokes,

    There were actually 2 share issues on Friday.

    The first was for 77,307,867 shares which were issued @5.4975c (ie: a 23% discount to Friday's closing price). That makes for $4.25M raised.

    Of this amount, I would presume that $3.5M (+ interest) was accounted for by the recent Findlay loan.

    I don't know about the remainder of the $750K that was raised.

    In effect, a further 13.6M shares were issued on Friday which no-one really knew about in advance.

    Regarding the Findlay loan (now converted - unless someone wants to argue to the contrary), $3.5M was leant on the 20th and promptly converted on the 29th.

    That makes for 63.67M shares issued on the 29th in respect of a loan that was in place for 9+ days.

    Assuming that tomorrow's share price remains @7.1c (or better), the Findlay parcel is now worth $4.52M shares, meaning that those who backed the 9+ day loan facility are now ~$1.0M better off for their very short loan term.

    Presumably, none of these shares are the subject of any escrow conditions, meaning that they can be sold immediately on the market.

    Maybe someone would care to comment how this is fair to the wider shareholder base?

    As for the 2nd share issue, this involved the issue of 20M new shares @1.125c (ie: an 85% discount to Friday's closing price). That makes for $250K raised. This same parcel of shares is worth $1.42M, assuming Friday's close of 7.1c.

    In total, 97M new shares were issued on Friday, for a total value of $4.75M. These same shares, however, were worth $6.9M, given Friday's close @7.1c.

    Now, I don't know about you Blokes (or other poseters out there), but what's fair about issuing shares to a select few, and in the process, making those select few upwards of $2.15M better off?

    Either this translates to a high risk venture, given the level or extent of the cash burn which is occurring and has resulted now in the issue of 288M new shares since 19 September 2002.

    The complete history of the last 12 months worth of share issues is, as follows:
    5m shares on 19 September 2002 for working capital (WKC) purposes @2.8c;
    87m shares on 28 October 2002 for debt retirement /debt conversion (DRC) and WKC purposes @1c;
    23m shares on 23 May 2003 for VSAT project (VSAT) purposes @0.007c;
    20m shares on 23 May 2003 for WKC purposes @1c;
    31m shares on 6 June 2003 for VSAT and WKC purposes @1c;
    25m shares on 12 June 2003 for VSAT and WKC purposes @1.3c;
    12M options converted to shares on 15 August 2003 at varying prices (all under 1.5c); and
    97m shares on 29 August June 2003 for VSAT and WKC purposes @~5.5c for 77.3M, and @1.125c for 20M.

    The resulting issues on Friday have now expanded MUL's share capital to 872.7M shares.

    This is up ~300M shares in 12 months, on the then existing 579M share capital base, and makes for a 50% expansion in the size of the share capital base in that time.

    MUL's fully diluted share capital base is now made up of:
    872.7M shares; and
    56.5M options.
    for a total of 929.2M shares (if all options were converted to shares).

    The problems that I have with Friday's share issues are as follows:
    63.7M shares were issued in prompt conversion of the Findlay loans (previously disclosed, even if not well managed by MUL);
    13.7M additional shares were issued (presumably also in connection with Findlay's), but on an otherwise undisclosed basis (at an effective 23% discount to Friday's closing share price); and
    a further 20M shares were issued at an effective 85% discount to Friday's closing share price.

    Regarding 2), I find it strange that additional shares were issued on the same terms as the previously disclosed $3.5M loan, but in circumstances where the Company may not have disclosed all relevant details to the market (otherwise, someone please explain the difference, given the connected nature of the issue).

    Regarding 3), I find it strange that additional shares were issued at an 85% discount to market in circumstances where there was no apparent conversion of Options. This transaction, in particular, needs to be explained to shareholders, given that this has so far delivered a windfall gain of ~$1.15M to whoever now holds those shares (assuming that they have not already been sold).

    Two separate share issues (one seemingly involving 2 separate issues, but not otherwise fully explained, and the other lacking a total explanation).

    Critics of my posts on MUL will argue that I am down-ramping the stock. But, really, what I am arguing about is the poor, continuing and apparently opaque disclosure management arrangements by which MUL appears to be acting.

    In due course, there may well be entirely creditable and appropriate explanations regarding Friday's various share issues. But for now, those explanations have not yet been provided, and the shareholders have not yet been fully informed of them. Maybe, they were discussed at the General Meeting?
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