FURTHER ARGUMENT TO FREEZE ALL PLI RESTRUCTURING TRANSACTIONFURTHER ARGUMENT TO FREEZE ALL PLI RESTRUCTURING TRANSACTIONS AND PUT PLI UNDER A JUDGE AND THE CCAA SENT TO AMF, MINISTRE ETC
SALP likes to point to how “generous” they were with the shareholders by offering them the “rights offering” the chance to participate together with SALP “at the same price point” in the future of Prometic Life Sciences. This is total misdirection and totally inaccurate and so designed for the optics only but does not put the shareholder who exercises the rights offering in the same position as that of SALP.
First of all the REAL price point is not at all the same – just the fictitious SALP price point based on unearned interest to 2024. The $0.01521 per share price point that SALP calculates is based on the conversion price of their debt ($229 MILLION) to equity of about 15 BILLION shares. However, SALP’s true cost of shares not counting the unearned interest out to 2024 that never actually occurred except in some lawyer’s (loan shark’s) mind was considerably lower. The actual real out of pocket cost of these 15 BILLION shares was only about $120 Million resulting in a real per share cost of $0.008 (not $0.01521) or roughly only ONE HALF the cost they flaunt to look like they are being generous to the shareholders and allowing them to invest on an equal footing with them. NOTHING COULD BE FARTHER FROM THE TRUTH.
This of course ignores the fact that the shares the investors already hold and paid for have been almost totally devalued to nothing (they themselves admit in the April 15 press release that the value THEY ADOPTED of $0.01521 was DISCOUNT TO THE MARKET of 91%). By what right do they choose this value? Because they wanted it so? Well the shareholders did not want it so, and they have the right to vote on this and the right to VALUATION to set what an appropriate value would have been. Both these rights were denied them via the shameful hardship application. This “rights offering” requires the shareholders to again invest MORE NEW dollars supporting the now SALP owned company thus saving SALP a further $75 Million that they will not have to put up in their new company but have AGAIN squeezed out of the public to be able to share MINIMALLY in the future profits that they have already paid for to this point and yanked from them just months before revenue flow would have begun. Investors who can not afford to put more capital in to what they already paid for once will have a near total loss of their investment.
If one considers what happens after the rights offering and assume a market cap for the company unchanged over the last several weeks, then the market cap was approx. 740,000,000 shares outstanding at about 30 cents thus the market cap was some $222,000,000 but after the restructure that market cap with 25 BILLION shares outstanding will result in a per share value of $0.00888 thus SALP with it real cost of $0.008 is already guaranteed an immediate no risk profit whereas the retail investor who chooses to swallow deep and exercise the rights offering with a REAL NEW COST OF $0.01521 HAS ALREADY IMMEDIATELY AGAIN NEARLY LOST HALF OF HIS NEWLY INVESTED MONEY. The situation even looks worse if one assumes a market cap of only $111,000,000 (based on the 15 cent share cost just before the April 15th PR) with a resulting per share value of only $0.00444 then the investor immediate loss is even greater. This is not good heartedness of SALP toward the investor but a way to have them again fund PLI to the benefit and saving to SALP another $75 Million they would have to put up themselves. The shareholder is asked to take much risk in the hopes of recouping some of their losses caused by the illegal restructure in the first place while the bulk of the profits from the promise of the future of PLI will go to SALP. SO UNJUST AND SO UNFAIR. THIS MUST GO TO A JUDGE UNDER THE CCAA TO DEAL FAIRLY WITH ALL PARTIES TO SHARE IN THE LARGE FUTURE PROMISE AND UNDERLYING ASSET VALUE HIDDEN UNDER THE LOAN OVERHANG. THIS IS PRECISELY WHAT THE CCAA IS DESIGNED AND MEANT TO ACCOMPLISH. NOT THE TOTALLY AND INAPPROPRIATELY USED HARDSHIP APPLICATION THAT WAS NEVER MEANT FOR THIS SORT OF SITUATION AND TOTALLY MISAPPLIED BY THE TSX ESPECIALLY AS THERE WAS NO EMERGENCY THAT WOULD HAVE PREVENTED THE VOTE AS THE AGM WAS ABOUT TO HAPPEN ANYWAY, BUT WAS PURPOSEFULLY DELAYED BY SALP NOT TO ALLOW THE VOTE AND COULD HAVE HAPPENED WITHOUT ANY HARDSHIP WHATSOEVER. THE AMF MUST FREEZE ALL PLI RESTRUCTURING TRANSACTIONS AND/OR REVERSE THEM AND HAND THIS OFF TO A JUDGE UNDER THE CCAA.
Furthermore, the $75 Mil cap on the rights offering what is that all about? Just a whim of some SALP lawyer for some unknown reason. So the presumed recovery if the full 20 to 1 rights were allowed may be reduced to 1/3 of that to only about 6.7 shares to one further REDUCING the already pitiful recovery of the investor by a further TWO THIRDS!
How and by what standard did they come up with a 91% reduction to market cap for the debt/equity conversion at $0.01521 per share. Why not have the conversion at 15 cent per share at the then already hugely depressed market value. By what right does the elimination of the vote allow them to set these values solely by some number they themselves picked out of a convenient hat? If an “independent” advisor came up with these numbers - just how did they do that? I would insist on seeing their assumptions and calculations. We would find that the assumptions were tailor made to came to this result only benefiting SALP. NOR DO I BELIEVE THEY WERE REALLY INDEPENDENT! I WAS NOT BORN YESTERDAY – NOR WAS THE AMF! FAIRNESS AND JUSTICE WAS NOT TOSSED OUT THE WINDOW JUST BECAUSE THE TSX DID NOT DENY THE HARDSHIP APPLICTION WHICH OF COURSE THEY SHOULD HAVE. UNDER THE HARDSHIP REGULATION, EVEN IF THEY LOST THE ABILITY TO VOTE, THEY DID NOT LOSE THE BASIC RIGHT TO FAIRNESS AND JUST VALUATION. BUT EVEN SO, HOW ARE THESE RESULTING NUMBERS JUST. THEY MUST HAVE SOME MEANS OF REVIEW. THIS IS THE KEY JOB OF THE AMF TO INSURE FAIRNESS AND JUSTICE FOR ALL – NOT JUST THE VERY RICH. Along the same vein, it seems that while the unjust taking seemingly became ok with the hardship application, why stop with just one hand in the cookie jar when you could dip both hands into the cookie and scoop up some more for the same effort. So they decided we might as well reprice and modify terms on all the many millions of warrants they owned at the same time. This just shows the frame of mind of the entire unsavory restructure.
Sincerely,
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PLI long time investor