RE:RE:RE:RE:THIS WAS NOT AN INSTITUTIONAL FINANCING!Beaner53,
Each deal can have different terms for certain...... but they all operate within a range of "reasonableness" so as to protect shareholders of record at the time of the financing.
A bought deal does not mean that the brokerage houses are buying shares for their own accounts to hold as investments. It simply means that instead of going out to market on a best efforts basis at the request of the offering company and for a lower commission they offer to guarantee and deliver the agreed upon funds to EXRO. This eliminates any and all risk for EXRO.
Shares do not change hands until the deal is closed. Bankers take the money from their clients in trust unil the deal closes. (usually a couple of weeks post the announcement. This is all automated through the appropriate channels (Compushare, etc.)
Banker risk is limited to the number of shares they could not get their clients to subscribe for. But EXRO gets the $30 million regardless.
Their risk is mitigated by a combination of the discount they negotiate on the share price which in this case was between 12 and 15%). Presumably this makes for an easier sale to their clients for the share price as well as the commission. That is all they get. Just the commission. Traditional deals do not usually have such large discounts and come with a lower commission as well.
Now in this situation they also were offered an overallotment option. They exercised that overalottment and had the option of purchasing them for their own account or moving them to clients as well.
I don't agree that the SP needed to fall to the offering price as the price offered exceeded the actual dilution.
If the underwriters were holding 13 to 14 million shares in their accounts then this would be shown in the institutional holdings report on EXRO. The June 8 report I looked at does not show anywhere near those totals being held by institutions.
In my opinion, the price action we see now is a reflection of EXRO's execution of the financing and the sudden lack of transparency.
I haven't sold share 1 but I am certainly not buying anymore until my confidence is restored.
Not sure if this answered your question but its how I interpreted it.
Simpliciti1