RE:The timing of the Debt/Equity Financing by Li Ka-Shing...Thanks Quack! Great to hear Nexgen is heading much much higher!!!
quakes99 wrote: As Cantor Fitzgeral analyst Rob Chang, and a host of others, have pointed out... the latest financing announcement at a rock bottom share price made absolutely no sense when supposedly a blockbuster PEA is about to be released. Why purposefully dilute existing shareholders more than necessary if Management believes that the PEA will rally the share price to allow equity financing at higher prices with less dilution?
I think the answer lies with the very shrewd businessman Li Ka-Shing, who has a lot of leverage he can exert on NexGen in their cash hungry situation. I would be willing to bet that when Leigh approached him for a second feeding at the trough, Li agreed to let him feed again on the condition that he issue 24M shares to his holding companies at the lowest share price possible, before the release of the PEA. Li wanted to have some skin in the game without having to buy on the open market, as he would never be able to buy 24M shares at such a low price in the marketplace. Having 7% of issued shares, plus the potential to convert the US$120M in debentures to shares, gives him the potential to eventually own a very large controlling stake in the company... giving him a say in its future direction. And he was able to get that in a way that bypassed the market and every other investor and investment firm that would be interested in participating in an equity financing.
He is using his debt financing to provide leverage that moves him further towards his goals... whatever they may be.
Is NexGen selling its soul to the devil? Time will tell...
Cheers!