Prospectus discloses possible share buy-backI just finished reading the Preliminary Short Form Prospectus dated Aug 6, 2013. The final one with prices and warrant valuation is not available yet on Sedar.
Some of us suspect that the primary purpose of this share issue is to create more votes for the upcoming AGM, to be bought by investors friendly to the existing CEO. The proof for me is found on page 21 of the prospectus:
"With the divestment of Animal Health, the Board may consider the payment of a dividend or other distribution (such as a share repurchase) depending on the amount of the sale proceeds and the capital required going forward." [my emphasis added]
So they are raising funds (and diluting me severely) so they can give the money back to me in December. Bioniche has never mentioned a dividend or share buy-back in a news release. So this is only in the prospectus to protect them when they do it after the AGM.
On page 16 of the prospectus, they say they will use the proceeds of the offering as follows (maximum case): $5.0m for development and commercialization of Urocidin + $1.725m for general corporate purposes. But Urocidin will take at least 3 years to get approval from the FDA according to their prospectus. So what's the rush to raise money? Couldn't they have waited 4 months to receive proceeds from the sale of Animal Health or up-front payments from partnering on Urocidin?
Ominously, on page 23 of the prospectus, they say "However, management will have discretion in the actual application of the net proceeds, and may elect to allocate net proceeds differently from that described under 'Use of Proceeds' if they believe it would be in the Company's best interests to do so with the exception of previously described external commitments. Shareholders may not agree with the manner in which management chooses to allocate and spend the net proceeds." [my emphasis added]
What might they do differently? Well, they could really insult me by doing an immediate share buy-back.
Caveat emptor.