Mondas- A New Phase!

Magpie,

The 80m shares is authorised share capital not issued!

I believe we have about 37m shares at present. The Blue Curve document says that if maximum consideration is earned and it is paid in shares at 17p (the lowest price allowed) then the "concert party" would hold 18,301,797 shares and that would be 37.62% of the total. Therefore there would be a possible total number of shares of 48,649,114. This assumes that the share price is still 17p or less in 2007 and also that Blue Curve more than doubles its turnover in 2006.

In addition to this it is possible that Foresight could convert their CULS at 50p! That would give them an additional 1.8M shares. If all CULS holders were to convert their loan to shares (at 50p/share) then there would be an additional 6m shares.

So the total theoretical dilution if Blue curve makes maximum payout, the share price is 17p or less in 2007 and all CULS holders convert at 50p even though current price is 17p or less is 54,649,114 shares.

It is of course highly unlikely that the Mondas share price will be so low especially if Blue Curve is doing so very well. Also why would the CULS holders convert at 50p if the share price is 17p.

If you work the numbers at a Mondas share price of 50p then it looks different. The earn out shares would only be 4,150,000 instead of 12,205,882. So total dilution would be small. If the rest of the Mondas business is doing so badly that the share price is still only 17p or less then it is fair to pay the extra shares to Blue Curve.

I do not agree that this is unacceptable dilution, on the contrary, it looks like a very good deal to me.

Cocker,

This sort of earn out deal does not create unreasonable dilution. However, I agree that we have had enough underperformance. In 2006 the directors must perform, and if we do not see a very significant profit in the first half, I will be very concerned.