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Obtala - this is non dilutive funding to grow, good news

By HotStockRockets | Thursday 8 September 2016

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Rather than issue shares like confetti as most AIM Companies do and, indeed, as under its former management Obtala (OBT) used to do, this company is raising capital to expand in a non dilutive way.

NAV is 30p plus. The share price is 11.25p-12p so it is a delight that instead of doing a discounted placing new Obtala boss Miles Pelham is looking after all shareholders by raising capital from folks who want to buy direct into his forestry assets. And Pelham is putting in his own cash too.

Thus five High Net Worth punters and Pelham have put up $1.1 million into the Meradell (2) Ltd investment vehicle, with the chairman stumping up $500,000 himself. That half a bar gets Pelham a 2.86% stake in these forestry assets which gives you some idea of their true value.

The other HNWIs get 4% for their combined $600,000. The investors get a 5% return + profit share and can elect ( bit are not obligated) to go  for repayment on 28 June 2017 in cash or shares, at Obtala's election.

Expect more sales of equity in other Obtala forestry vehicles to allow the company to grow its acreage without dilution. We said Pelham was a class act and he is delivering. The shares should trade at a far small discount to NAV and the stance is, at worst, strong hold.

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