Growing PainsWhile last weeks announcement obviously surprised many, given the small cap nature and the totally out of favour sector, it should have not been so shocking to those informed. Growth cos. by their nature require constant capital to advance their business. With the conversion of the 2nd greenhouse in Delta and the recent involvement in Netherlands, funds were obviously required beyond the cash flow.
The Board must have assessed the risk/ reward question thoroughly before proceeding with the new issue and determined that the capital raise was in the best interests of the co.. The probable reactions by investors undoubtedly was also discussed and factored into the decision.
One should always remember that for every seller (pessimist) there is a buyer (optimist). Only the long term will determine who is right eventually.