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| Subject: Posted by: lost Nov 30 2002 9:19:07:153AM | |
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Author: Net effect of equity placement and consolidation of ERG |
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Date Posted: 19:44:32 01/10/03 Fri Symbol Last Change $ % Open High Low Volume More Information Broker Edit ERG 0.105 +0.005 +5.000 0.105 0.110 0.100 1,572,747 Profile Chart Customise Broker Quotes delayed 20 minutes, Australian Market is currently closed (2:42:13 PM:AEDT) Posted by: lost Nov 30 2002 9:19:07:153AM Reply to post # by Go to Post # Previous Respond Message List Next 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 (Voluntary Disclosure:Position Short Term rating:Buy Long Term Rating:Buy) OZeStock Advertisment:"Get yourself an institutional advantage!" Previous Respond Message List [ Next Thread | Previous Thread | Next Message | Previous Message ] |
| Subject | Author | Date |
| Re: Posted by: lost Nov 30 2002 9:19:07:153AM round it further 15.79 | 28/11/2002 of 462.1 equals 15.78c per share | 20:08:22 01/10/03 Fri |
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