Don't send your proxies in just yet.
There are several problems with the proposed resolutions as outlined in the current mailout and announcement to shareholders.
However, as I have been a shareholder for many months now and been researching this company intensely, we can, I believe stop this proceeding.
Do not send in your proxies just yet.
There are several problems with the proposals.
Resolution 1:
Buy one get one free director resolution?? A NORMAL proxy form would list directors separately so that you get to vote on each individual. Imagine if BHP offered six directors up for re-election and you only got one option in the proxy form to vote For/Against/Abstain. It is not BEST PRACTICE. For each director up for nomination you should have separate For/Against/Abstain options.
It clearly states on page 1 of the Notice of meeting the election of EACH director of the Company is ...."(to be voted on as a separate ordinary resolution)" and yet no provision on the proxy form is made for this offer.
Resolution 2:
Adopting a report ... can't do much about changing that.
Resolution 3:
Approve the renewal of the Transol Management Option Plan?
Well, I ask you if the current offer to directors of options as specified in Resolutions 4 and 5, giving Richard 15,000,000 free options with a strike price of 2c and a further 10 million unquoted management options with a strike price of 2c, what incentive is there for him to perform?
Options are currently trading at 1.6 c, so without effort that is worth $240,000. Why not make the strike price higher so that there is an incentive for Richard to perform, which I've no doubt he will.
In addition, this would allow them to issue management options up to 10% of the total number of issued shares i.e. 29,353,000 options. Once the current new lot of shares are issued in Resolution 5 at 2.5c (another 100,000,000) plus as proposed in Resolution 6 another 20,000,000 shares at 2.5c to Mr. Angus Edgar, then 10% of the NEW number of shares will be:
413,530,000, so that in future, management can issue to themselves 41,353,000 which will be the new 10% figure. Then add the further outstanding options on issue which can be converted and you start to see how management can cream a huge amount of options at unfair prices from this company.
This has to be stopped!
Resolution 4:
The strike price of the options is way too low. There is little incentive to perform.
Resolution 5:
We are disturbed by the offering proposed under Resolution 5 to issue 100M shares plus 50M option to a selected group of investors. Why not for everyone as a rights issue?
For those that have done the sums and research.. its not a fair deal if a select few get shares for 2.5c and free 2c options, particulalry as the shares and option package equvalent was 4c in April and yet there has been more work done since then in the background creating company value.
Also Melbourne Capital Limited clients would be given priority on these shares... Who is a director of Melbourne Capital... Angus Edgar, and he will receive a management fee for handling this issue.
Resolution 6:
Angus wants another $500,000 worth of shares and options for 2.5c.
I seriously question why Angus wants more cheap shares at this time when as stated on a previous thread TNC has over 3 million in the bank!!!! Which was obtained on the basis of being spent on current projects in the wings which were yet to be announced.
If those projects are imminent and the money is already there, the share price will, no doubt climb. So to hand out these cheap shares when there is no need for more cash at the moment, gives directors a cheap entry into TNC. Previously Angus has converted loans to the company for shares which, when calculated at price per share, have been as low as $0.00804354 cents per share (15/8/2006 $200,000 loan funds converted to 24,864,662 shares).
Then on 15/8/2006 $15,137 loan funds converted to 15,131,600 options at $0.0010003 cents
see page 3 of annual report. There is more but I won't bore you with more detail.
Resolution 7
So the person who creates the scheme drags Richard into it as well to give it some credibility. Happy as I am that Richard has come on board, I still believe that there needs to be incentives with the options and the strike price of the shares in Resolution 6 and 7 needs to be higher, i.e. around 4c as it was back in April. As Dartboard stated, we have more assets in the company and they offer the shares at 2.5c????
So does that mean if further deals are brought into the company that the directors will offer shares at 1.5c in the future??
Many of the shares in the top 10 cannot be used for voting because of conflict by way of association.
Even GAU cannot vote, I believe, because I can demonstrate an association. There are many companies in the top 10 that are related to one of the directors. Therefore, we can, and should make a difference.
I also urge you to come to the meeting if you possibly can, because unless these resolutions are stopped, they will now have the numbers to keep asking for more and more shares.
Email me at
watchtnc@hotmail.com to offer your support and we shall keep you informed on what we are proposing to do.
Cheers,
Tangrams