Death Spiral Financing for Rusty and others...27 Mar 2026 13:07
Under a “death spiral” scenario, the holder of the convertible debt might short the issuer's common stock, at which time the debt holder converts some of the convertible debt to common shares with which he then covers the debt holder's short position.
The debt holder continues to sell short and cover with converted stock, which, along with selling by other shareholders alarmed by the falling price, continually weakens the share price, making the shares unattractive to new investors and possibly severely limiting the company's ability to obtain new financing if necessary.
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In short (no pun intended) if only;
The "financer" of the "future" loan (UKOG's mates) agrees a loan amount to UKOG (which they keep very quiet).
The financer sells (over a short period of time) the equivalent number of shares (they don't own YET) into the market causing the SP to drop.
Once they have completed the Sells, UKOG announces the raise and loan (the equivalent number of shares are issued to the financer).
The SP continues to fall as Investors now know there is a large number of shares coming to the Market. The shares are admitted a week or 2 later onto the market, thus closing out the finance open positions the financer gains on a continually dropping SP, and charges UKOG a fee for the privilege of helping them Raise money desperately needed.
Only problem with DSF is; the vast amount of shares that need to be sold onto Naive Punters HUGELY depresses the SP over months and months.
Which can virtually kill a Company off, but the Company got their money which probably went into "Admin Expenses"😉 and the financer makes £££££££'s too!
Shareholders/investors are wiped out.
I think you get the jist of it, to put it another way; it's a form of "closed shop" shorting of the SP whilst providing UKOG with much "needed" financing!
Still, what do I know!
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