RE:RE:RE:Do Reverse Splits Ever Work?Reverse Split/Share Consolidation/Rollback: They could go either way depending on the stock and market perception. Take a rollback at 10:1 as an example, a 1Ms holding at ) $0.55/s would become 100,000 s at $5.50 (mathematiccally/theoretically), but following the conversion. the SP could go either way, below $5.50/s or above $5.50/s. If RNC (proposed new name: Karora Resources, under a new symbol, if approved at the Special Meeting in June) has some positive news after the rollback then the SP could rise above $5.50/s). I would list the pros below, but leave the cons for others to fill in.
- the OS would be reduces significantly, to about 60M shares (holding, in percentage, would remain the same, i.e. ES would have ~8% of RNC). Since the float would be tighter. Any rush for shares with good NRs would cause the SP to "explode".
- There was a desire from institutional investors (they have quite a few more, over a dozen now) to have higher share price (over $3.00/s?) to sastify their internal requirements (some funds are not allowed to invest in penny stocks).
- Higher SP would allow margin (say 50% on the holdings), so people can have higher leverage their investment (personally, I don't like using margin, since people could lose their shirts with margin calls...which are brutal, lenders may sound sympathetic, but there is no mercy in a margin calls. Only invest with money you can afford to lose).
- A smaller OS would allow the company to raise money by issuing more shares. They could add another 20Ms (20/60+60 = 25% dilution) at $5.50/s, or even at $5.00/s, for $100M without attracting too much eyebrown raising. $100M will wipe out all debts and leaving a large chunk of ash for future development. I would not be surprise if Paul Huet decides to take this plunge. Even a financing for 10Ms would bring in $50M to wipe off all debts (they still have ~$38M cash, plus surplus cash coming from every Qs). Eric and institutional investors may want to jump at the opportunity seeing the solid fundamentals (ES said so, in his latest weekly wrap-up, near the end, 05.15.20).
As indicated, I am not advocating a rollback on its own. But, if there is something else, like a name change, along with a solid strategy for the future, then I don't mind going along with it.
If ES mentions RNC again, especially any additional investment, then it would be somethin, noting that he's now leading the pack with Westgold sold 4% of its holding (5% left). One option would be for ES to take that 5% off Westgold's hands (may be Wesgold need ~$15M cash to do something else).
GH11
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LiTeOn1981 wrote: EQX and VGCX are good examples of sucessful share consolidation.