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| Subject: Re: Shares on issue ERG--price should be between 13 and 14 cent level. | |
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Author: Lost view given at 10.5c post 3035 November 30th 2002 Ozestock entitled "Net effect of equity placement and consolidation of ERG" |
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Date Posted: Saturday, March 01, 06:36:36pm In reply to: Pre consolidation post consolidation. 24/1/03 's message, "Shares on issue ERG" on Thursday, January 23, 09:16:54am Posted by: lost Nov 30 2002 9:19:07:153AM ------------------------------------------------------------Net effect of equity placement and consolidation of ERG ------------------------------------------------------------ Hi Everyone, ------------------------------------------------------------ ERG has decided to go the big bang approach in finally fixing itself up. IMO the market has got it wrong on the current value of ERG. Following identifies what will happen to ERG’s shares on issue over the next six months (with shareholder approval): ------------------------------------------------------------ Currently 936,879,165 shares on issue. Current market capitalisation equals $116.4 Million at 12 cents per share is. ------------------------------------------------------------ Conversion of convertible notes to shares at face value of $13.50 for 90 shares at 15 cents each means that shares on issue will rise by 1.665 billion to 2,601,879,165 shares. ------------------------------------------------------------ Equity raising by granting one option for every eight shares a shareholder holds to purchase a share at 15 cents. 325,234,896 options will be issued to raise equity after notes have been converted. ------------------------------------------------------------ If all options are taken up to raise equity, shares on issue will rise to 2,927,114,061. ------------------------------------------------------------ After equity raising, consolidation of shares will occur. For every 10 shares one holds this will turn into 1 share. Reducing shares on issue to 292,711,406 and hopefully increasing share price from 15 cents to $1.50. Market Capitalisation will then equal $439,067,109. ------------------------------------------------------------ If the share price was to lower to equal the current market capitalisation then the share price value will be divided by 3.91 times. So if the market still thinks that ERG’s value should be $113 Million then the share price will fall to $0.3836 per share. Currently on the market if this was to occur then a share should equal around 3-4 cents per share. ------------------------------------------------------------ However, this excludes the reduction of debt from the convertible notes. If you add the $249.7 Million they do not have to pay back and the decrease in interest payments by $18.87 Million per annum, this means that the value of each share rises approximately 85 cents with the debt reduction and 92 cents if interest payments are taken into account for one year or 1.06 cents if the full amount of interest payments over three years is taken into account. ------------------------------------------------------------ The above calculations will mean that the current share price should be between 13 and 14 cent level. ------------------------------------------------------------ It also does not take into account a low debt company and the amount of projects that it will be awarded because of this situation. ERG is poised for strong growth moving forward. The main point that I liked about the report was that an aim will be to reduce equity dilution of current shareholders positions. This has been the one tenet that I have been concerned about since beginning investing in ERG last August. I feel that this has been a large reason for the ever sinking share price (apart from writing off $249 million in assets). I for one will be investing further at these levels. ------------------------------------------------------------ Best of Luck Lost ------------------------------------------------------------ [ Next Thread | Previous Thread | Next Message | Previous Message ] |
| Subject | Author | Date |
| A view also given on Seattle and it's worth/also expressed ERG not out of the woods yet--re results coming up March 6th--market sentiment/may or may not like them. | Lost's views post 3902 Feb 21-03 - estimated value based assumption9.5% margin-Sydney breaking implementation 5 stages 1st-lasts 4 mths/different earning multiple scenario's | Saturday, March 01, 07:04:01pm |