Cheers @duffshot38.....much appreciated. Thought I was going a little crazy when I initially read the story and saw the price. As with you I also believe it seems as though it's a fairly straight forward deal so I'm hanging in (ended up buying yesterday) Nothing wrong in essence getting a business ~$0.

Just be aware I havent factored in any tax impacts as I use my SMSF and it wont really impact significantly but any unfranked dividend component in the payout will be taxable and the capital return component is tax free. If you are in highest tax bracket that has a big impact.

DYODD

Also - the business after the sale is not super profitable as it probably has overheads suited to a larger business. I expect management will adjust the overhead to match the new business but this may take some tome and cost too but overall Im happy to have a crack

Time to do a report on the final outcome of this arbitrage opportunity. Its a bit complicated and if you want a better understanding I am happy to provide more info but if you follow the discussion above it will assist!

Initial purchase @ $1.52 on 3 NOV.

Return of capital of $0.92 received on 22 DEC

Special Dividend (Unfranked) of $0.57 received on 22 DEC.

= $1.49 return before tax and $1.4045 after tax (In SMSF)

ie you received 98% pre tax / 92 % post tax of your investment back in 49 days

You were then left with a shareholding in the smaller company

The Before tax - final cost of remaining shares was $0.03. ($1.52 - $1.49)

After tax - final cost of shares (In SMSF) was $0.1155. ($1.52 - $1.4045)

Company has since done a 10 - 1 consolidation so we need to divide the current share price by 10 for the return calculations.

Current share price is $1.80 = $0.18 pre consolidation

If you sold them yesterday you would have a $0.15 pretax return / 9.86% on your initial investment of $1.52

If you sold them yesterday you would have a $0.0645 after tax return 4.24%( In SMSF) on your initial investment of $1.52

The investment thesis for this was as an alternative to having cash tied up in the bank so we need to look at it from an IRR perspective (ie what rate of return you would have needed to earn in your cash account). To make it simple - we just need to multiply the rate by 4 to come up with an equivalent interest rate

Pre TAX - 39.44%

Post Tax - 16.96%

Not bad but there were risks in the transaction you ned to be aware of but getting 98% of our investment back in 49 days reduced the risk we were taking significantly. The deal could have fallen over and we would have lost some capital but at the time of investment it was very low risk. You could have sold out early for a higher return and IRR but I decided to keep the shares.

You can see why I do spend the time to do these kinds of transactions with my cash in my SMSF as the returns can be very good compared to in the bank. The low tax environment of an SMSF does help also.

I am actually going to keep the shares in this case as I am happy with them as an investment moving forward and the amount of cash already received has topped up the account.