RE: This is18 Jun 2018 14:20
Unfortunately Chaz, this price drop is not an overreaction. On the 6th June, the day before the General Meeting RNS was released, the buy price was 2.8p. On 7th June, we learned that the board didn't consider the option to release the remaining 46.9 million shares at their disposal was sufficient to cover their needs.
Looking at the GM RNS, you can see the first (but not the only) option available to them once the vote has been passed is to issue 33% more shares and guess what, the share price has now declined by around 33%. 2.8p x 0.67 = 1.876p. So the market has reacted quite logically in pushing the share price down to the current level.
What needs to be asked now is, does the market think that more than 33% more shares will be issued?
As shareholders we also need to ask whether the board were right to ignore the already received authority to issue the remaining 46.9 million shares which, I suspect, they could have got away at a price of at least 2.5p and bank £1.17 million in the process as against the 93.8 million shares they can now issue but probably for probably no more than 1.75p or maybe less.
1.75p will bank them £1.64 million but if the price continues downward and they place at 1.5p then they bank only £1.4 million, and worse still if they have to place at 1.25p then they bank only £1.17 million and are no better off than if they had placed the originally allowed for 46.9 million shares.
Time will tell but I'm beginning to think the board are going to end up looking like prize pilchards come the end of this fiasco.
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