Trading should resume in Murray River Organics shares (ASX code MRG) on March 5.
The embattled company had until February 7 to find underwriters prepared to guarantee a capital raising of at least $25m to meet its bankers' conditions for restructuring its debts.
It succeeded with days to spare, but the terms have made the Punter gulp.
He was bracing for a share purchase plan offering shares at around 2.5c each, or half the price they were when the shares were last traded at the end of November.
That would have meant issuing a billion new shares to raise the $25m minimum required.
Instead, the new shares have been priced at a mere 1.5c and the company will sell a whopping 1.6 billion shares.
At that price, the Punter's original $9292 investment in MRG shares is worth $765. Ouch!
He hopes the underwriters insisted on undervaluing the shares to make sure they do not get stuck with too many of them.
They will get rid of any that are not taken by eligible investors by running a bookbuild, meaning they will ring the institutions and other major investors and sell them to the highest bidder.
They won't want that auction to price the shares at less than they paid for them, so presumably, they believe investors will see 1.5c a share as a bargain.
Another positive is that the company's major shareholder, the Thorney group, is taking up its full entitlement - about a third of the total offer - and is prepared to underwrite a further 17 per cent.
The offer is 3.843 new shares for every one held. It opens today (February 13) for retail shareholders, and closes relatively quickly on February 25.
With the shares still suspended, there is no indication as to what the market as a whole will think they are worth.
The Punter is tempted to buy, but has nothing to lose by waiting a week.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
