@mikebrisy and @jcmleng This style of capital raise that is placement only to instos is literally the worst possible way to raise capital. It benefits one group of shareholders over another. It dilutes all shareholders but only gives the select few the chance to participate at the discounted offer.

It's a hard sell for me anytime my management team decides to treat me like this (other than the truly rare emergency situation that occurred in the likes of a covid business shutdown where they may not have time to get the retail raise away).

The last time this happened to me was with Alcidion 5 or 6 years ago. And I haven't regretted that sell decision as they have diluted away multiple times since whilst the losses increased and the share price falls further...

If you were a fly on the wall in the Avita Board room as they discussed their situation and plans here, I doubt you'd like what they had to say about the "retail" part owners like you in the business. If you don't want to participate that's fine but the least they can do is offer you a fair chance at it. And it looks like about 70% of Avita's register are retail shareholders so this a particularly unfair slap in the face.

@Karmast , fully agree, its not great. 2 thoughts on this:

In AVH's case, I accept the criticality of the cash situation and the need to act quickly. There was $15.3m in the bank, $11.3m in Receivables, a $10m minimum cash balance OrbiMed covenant vs a cash requirement of ~$20m per quarter. I did not think they had time to mess around with a retail portion given the time it would take to get through the whole process vs putting the company in a more precarious cash position. And then there is the issue of keeping the price up for longer to actually reduce the dilution, not a small endeavour given intense negativity around the company.

The other times where management DID make the effort to include retailers, it flopped - think it was ALC and EOS - it was cheaper to buy off the market, even with brokerage.

So all said, putting myself in AVH management's shoes, I think it was the right call for the company coming off the back of a challenging period, lousy as it is for an existing retail shareholder ...

@Karmast yes, that's absolutely fair, and I do mark them down for it. Although I am not in the camp that places a lot of weight on that, but consider it alongside other factors.

In this case, I'm also rather more sanguine, because I was able to increase my RL stake at close to the raise price. i.e., the "actual" discount delivered to instos. is barely more than was available to retail shareholders who were paying attention. If there had been a much deeper discount, then yes, I'd be miffed. But, in this case, I recognise that it is faster and less costly to tap a few friendly instos and I don't feel like I have been disadvantaged. Furthermore, I think @jcmleng is probably right in that over the coming weeks, absent any news, the SP will drift down. So @jcmleng will probably beat the raising price and get in at sub-$1.30, That is, unless in the webinar tomorrow management can offer further information that derisks the CMS-MACs reimbursement issue, in which case the SP could sail away again.

So, while I agree that management are not as retail SH-friendly as one would prefer, and even though I have been scathing of management's ability to deliver on their timelines, I do see a potentially very strong value proposition here - albeit one with multiple risks.

Unlike $ALC, this business has products that are looking like they are clinically differentiated in a rapidly growing segment, in the world's largest healthcare market. While I have also written about the unattractiveness of this market segment (the specific segment of dermal matrix where $PNV, $IART, $AVH, $ARX and others all compete) given its competitive intensity (and I still believe this to be true), my thesis is that $AVH MIGHT be competitively advantaged, given 1) the combination of the unique nature of ReCell and 2) it's multi-product "one-stop" strategy. I've followed this business for 6 years, and owned it briefly with a very small position when I decided it was too early and before it developed ReCell Go, received several FDA approvals (incl. for vitiligo), licensed in 2 complementary products, and signed up most of the major US accounts.

We'll know if this business is going to be a success in the next 12-24 months. Over that time, the SP might indeed drop 50-70% or more if it doesn't deliver, but equally, it could go up 2x or 3x from here at least, particularly if it achieves CF breakeven by Q2 or Q3 2026, for which it now has sufficient cash to achieve this. That's a risk-reward I am quite happy with. And I have some further optionality that if at the next half report the reimbursement "shock" isn't fully resolved and ReCell sales don't rebound, then I will back out - hopefully before the "minus 50% SP" scenario is realised. Equally, if it is strongly back on track, I'll add more, as I potentially want a bigger position in the success case.

So while management haven't treated me equally with instos in this raise, and while they consistenly put targets and guidance out there and fall short, I've never found them to be dishonest or to do anything untoward. On the contrary, the business has achieved an awful lot in the last 5 years, growing revenues from A$17m to A$102m, and likely to do much better in future.

Now, some will say, why own them when there are literally thousands of alternatives on the ASX? My answer is, that is a valid response for many/most. However, healthcare generally, and medical devices in particular is a market I believe I have a better understanding of than many, and so my universe is much, much smaller. And in the pool I have chosen to swim in, I see the potential for a lot of value. (Conversely, I have no edge in all the small caps miners, banks, financial services, property etc., so investing there is unavailable for me.)

But of course, time will tell, and I'll happily come back to this post (and eat humble pie, if appropriate) in - let's say - 12 months time. That's the fun of this, isn't it?

If mgt have let their cash position get so perilous that they couldn’t wait 3 weeks or so for the retail raising to come in, then that’s another enormous concern?

And if you don’t want to participate or think the price will go lower and decide to wait for that, then all good. But surely you’d at least prefer to have had the option, like they gave to a select few instos…

I have no idea whether they’ll go on to be a winner from here and everyone’s style is different. So I wish you the best of luck as in my humble opinion you’ll need a bit more luck all else being equal, when you have a mgt team like this.

Fair enough @mikebrisy and I don’t have a view on the business and thesis itself. Agreed if you have an edge here you should use it.

Just wanted to flag the issue in the spirit of @Strawman himself and the honest exchange of views!

Hi Folks

Strongly concur with @Karmast's feelings around not extending the opportunity to participate in discounted capital raises to all existing shareholders - it is poor form by the Board and in my opinion done purely for expediency's sake of taking the "safer" money (i.e. Insto's and Underwriters's quietly sounded out in background) than risk potential humiliation or bad sentiment from a perceived "flop" of a retail raise.

The usual fall-back for this that balances this risk with fairness seems to be an Insitutional Placement to cornerstone the required funds, with a retail SPP up to $30k to allow retail to participate for some additional funds (with no problem if only a lower take-up as this part of the capital raise isn't essential).

Anyways - thought I'd share article from today's Street Talk in AFR about the capital raise that may be of interest. What I found most striking was the incredible mismatch between the US listed RCEL shares short position (22%) versus the ASX's listed AVH shares reported miniscule position (0.22%). Not sure if anyone has any thoughts or insights on the nature of this massive discrepancy in short positions by geography?

Avita serves up a $23m capital raise but goes shy with co-manager

@Karmast I always appreciate the challenge and perspectives contrary to my own - especially from you, There is no value here if we always agree with each other. :-)

My long-winded response to your challenge was simply because that, while I agreed with your point, I wanted to explain other factors that drove my decision. Setting it out here helps me clarify it for myself, too.

Sometimes it's hard to say if instos benefit at expense of retail

I've seen some raises with instos or funds only which have been positive. Look at Wrkr, Petratherm and MTM as examples.

I guess it depends who the institutions are and what their view is.

@Randy , I think the mismatch of short position between RCEL and AVH is a timing issue of when the data is updated.

For RCEL, I can only find data for 31 July 2025 as the data appears to be updated every 2 weeks.

For AVH is 7 August 2025 on Shortman where it dropped 0.1% from 6 Aug to 0.22%, the data is updated T+4.

The date absolutely matters, so I am looking at both sites daily to see updates.

In the just completed call, Jim Corbett mentioned that ~50% of the RCEL register is AU based, so the drop to 0.2% in AVH is significant, in my view, and I expect RCEL to have a similar drop, based on the price action in the past wek.

@Karmast , I understand your point about the cash position. But in the overall scheme of things - low cash balance, the need to focus back on growth to repair the damage caused by the reimbursement drama's, the need to sell the 36% days in hospital reduction etc, getting rid of the cash issue by a quick insto raise vs dragging it out for another so many weeks makes good management prioritisation sense to me.

For sure, I would have absolutely liked to have had the option to participate in a raise. But given what has happened and where AVH is now in the recovery process, I still think giving up the retail portion of the raise was a small price to pay. I want management all hands on deck focused on recovering that lost revenue in 2H - the outcome of that recovery will keep shareholders significantly happier I feel.

@Randy I don't know the answer to your question, as I don't know much about shorting and have never done it or studied it. Howevr, given that AVH's primary listing in now on the NASDAQ with CDIs listed on the ASX, a shorter has a choice as to where to place their bet. Given that there is higher liquidity in this security on the NASDAQ, wouldn't that make it cheaper and less risky to place the short on the NASDAQ vs. the ASX?

I mean, as you point out, there is a vast difference in the % short interest, so there has to be a reason.