Paul Sundstrom is part of the rescue group helping to get the Boulder Steel project out of administration and into the community's hands.
Paul Sundstrom is part of the rescue group helping to get the Boulder Steel project out of administration and into the community's hands. Luka Kauzlaric

Time tight for Boulder rescue with more contributions needed

CONTRIBUTIONS are growing steadily in support of the Boulder Steel rescue plan, but time is essential after January 17 was announced as the proposal deadline on Friday.

The rescue group has had a positive response from community members, but there still appears to be many unanswered questions.

The $4.4 billion Gladstone Steel Plant Project will bring 1800 operational jobs and $450 million a year for the regional economy.

Boulder Steel rescue group co-ordinator Paul Sundstrom has addressed some of these questions in the below Q & A, and is looking to hold a series of community forums as soon as possible.

"We have very little time left now to take advantage of this very unusual opportunity," he said.

"Although it's not one of my strengths, I think the community needs the chance to have the situation explained and their queries answered in person."

Keep an eye out for further details in The Observer.

Calling all Johns

AROUND January 5, a man called John contributed funds to the rescue fund but left no details. Please phone 4979 0200 so all details can be recorded for share issue.

Rescue details

Minimum contributions of $100 to the Boulder Steel rescue fund can be sent to:

  • Dedicated account name: Paul Sundstrom
  • BSB: 064705, Account number: 10432061
  • Personal details: Please put as much of the last name of the person, or organisation, who will be the shareholder into the "account description" or similar, and send a separate email or fax with the full name, address, contact phone number, and email address to taseng@hotkey.net.au, or fax to 4979 0210.
Plans for the Boulder Steel development in Gladstone.
Plans for the Boulder Steel development in Gladstone. Contributed

Q&A

Paul Sundstrom answers your questions ...

How are the finances going to be administered for accountability?

We are in the process of setting up a management company, and a trust to hold the funds, but for the time being they are in my name as there was no alternative but to discard the project.

If we wait until this is done, the project will be lost, as we only have weeks left to rescue it. Anyone is welcome, unannounced to audit the dedicated account.

What happens to the contributed monies if we are unsuccessful?

Any monies not spent will be returned to contributors.

If the rescue plan is a success, will my existing shares be recovered?

Yes, minimising dilution to existing shareholders is a primary concern, and we would expect final dilution to be around 50%, and the shares to be around 40 cents when construction begins.

How much money is required from the rescue plan to see Boulder Steel progress with the Gladstone Steel Plant Project?

Progressively over the next 8-10 months we need $2 million, to complete the Environmental Impact Statement, finalise the Joint Venture agreements with the Chinese and German partners, and raise $20 million on the share market to get through to beginning of construction.

After that, Boulder will be able to borrow money from traditional lenders, until the first shipment of steel is sold.

How was that 5-15 cent share price estimated?

Boulder has negotiated a 10% "free carry" with the JV partners, which means they will be given a 10% equity in the project, and when construction begins, and it becomes a confirmed reality, it is worth $370 million with Stages 1 and 2, which will underpin the share price.

There are currently 550 million shares issued, and that will increase to around 800 million by the time the above $2 million has been raised.

At 370/800 = $0.46 per share, but the market heavily discounts this to something like 20-25%, because it is not yet a reality, and things could go wrong, so averaging these percentages arrives at an estimated share price of $0.46 x 0.225 = $0.10, and if only Stage 1 is built initially then we halve that to $0.05.

What will be the administrative costs to run the rescue plan?

Zero - the rescue group is running on a voluntary basis and 25 million shares have been allocated to the group.

Will the existing management team be retained?

The two remaining Boulder Steel people are Ross Johnson, project manager, and CEO David Simpson. Both are good, competent people, and the intent is to retain both of them.

Before David joined the company, and about 12 months before it went into Voluntary Administration, some terrible things had been happening, and a lot of money was wasted.

We will be appointing the new Board of Directors, and will be making absolutely sure that nothing like that happens again.

Why was the rescue plan not published on the ASX?

Steve Nicols of Nicols & Brien, the new administrator, was unaware of this rescue plan at the time, and is the only one who is authorised to put up announcements.

The Deed of Company Arrangement owners, such as Tasman (our DoCA), do not have to tell the administrator how they are raising the necessary monies to fund their DoCAs.



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