Suggestions for Sham TransactionsCommon sense suggests Bioniche will have difficulty finding buyers for 25 million shares at 29 cents per unit (1 share + 0.5 warrant). That is because Fonds needed to drop the price to 18 cents to unload 5-10 million shares. It is said there is a sucker born every minute, but I cannot believe there are still any suckers left. Certainly not in Australia.
Therefore I have assembled a list of suggestions for how Bioniche could soak up all the shares offered. Unfortunately they are all sham transactions, but then announcing the AGM in May isn't exactly standard practice, so why not give one of my ideas a try?
- Proposed buyer of Animal Health pays $7m for 25m shares, then votes them in favour of the sale at the AGM. They buy the AH assets. After Bioniche Inc receives the proceeds from the sale of AH, Bioniche could do a share buy-back and give the AH purchaser their $7m back. Or Bioniche could just lower the price for AH by $7m and the 25m shares are quietly paid for.
- Bioniche Board of Directors authorizes a $7m loan to an employee ... to McRae. McRae receives a cheque for $7m and the company sets up a receivable. McRae gives the cheque to the Broker doing the best-efforts offering and receives the 25m shares in return. The Broker gives the cheque to Bioniche as the proceeds from the share offering. Bioniche rips up the cheque. Now Bioniche has a receivable from McRae and McRae owns a total of 33m shares going into the AGM.
- The Board of Directors fires McRae as CEO, paying him a $7m severance. McRae uses the money to buy the 25m shares. At the AGM he then votes to appoint himself as new CEO.
Any of the above transactions will help offset the loss of support from the shareholders who previously were going to support McRae in selling AH, but have now been significantly diluted.
(Top that, Zep.)