RE: Gap in a big pickelHey everyone,
If this financing needs to be done, then it's best if it's done all at once, rather than little bits here and there, and the uncertainty that it produces. In terms of what the money is going towards, whether it could have been done in debt, the burn rate, etc, all of that is another story.
The issue that is rearing it's head is that management might have overestimated just how much backing the retail investors were going to give. What they leave themselves open for is coming back to the market and saying "We got a good chunk of this filled, but either we need more time, or are going to just take what we can get."
I don't imagine the market would react favorably to that, however if they did fill it, I see that as being something the market would rally slightly off of.
The one good thing about this placement is that it is of the "non SLA" variety, meaning that there will be a 4 month hold, and that should produce a certain investor base.
At this point I would be surprised if they could fill it by Monday. I think the market price is giving us that answer. The door still would be open for Stormont to pick up the slack, and I'm not ruling that out. Maybe they had this in mind the whole time, and is why such a short time frame was indicated, knowing full well they would be able to fill whatever wasn't taken. Only Stormont knows that answer at this point. I still find it difficult to justify them buying in at 20 cents, when they could have had a share and a warrant for 18 cents.
Management needs to start building credibility, and I hope this isn't another step in the wrong direction.