RE: Buy under 3p or pay 8p in June2 Apr 2023 15:28
thanks MB10 for this interesting write up
"Removing the short term financing facility is a big turning point for three reasons. Firstly, there’s a clear indication that the company now has enough cash to get through to profitability (and the addition of more deals that provide cash during that period since that facility was announced nails that out of sight). Secondly it’s stopped the guaranteed selling into any subsequent news and also massively changed sentiment. But don’t read that the wrong way, of course there will be selling in the future, people will take profits, need money, all sorts of things, but the key thing is that is back to normal share price mechanics, where everyone has a fair chance of assessing the risks and the rewards. The third reason is at the end of this post.
For anyone who doesn’t understand either his mezzanine finance operates or indeed the impact of mezzanine finance on sentiment of investors, have a look at genedrive GDR that announced a similar arrangement last night. A few days ago their share price was over 40p, now after announcing £2m (with the promise of another £3m)of MF they are at 28p. That arrangement has 6.5 million shares issued at 1.5p to seed how the facility works. (And I note that terrytitsoff isn’t over there claiming that they had a placing at 1.5p - although you can’t comment if your account is deleted ;-) ). Those seed shares are sold to generate the cash payment for the facility, and then are replaced by converting that equivalent cash sum into shares at a discount to the lowest VWAP price, thus ensuring that the financiers have more shares than they started with for the next conversion. T
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