RE:RE:Share Dilution: A Bad Deal for Minority Shareholders At first, I was optimistic about this deal. Reducing Big Rock’s debt burden and stabilizing its finances seemed like the right steps to turn the company around. However, after digging deeper and analyzing the details, I’ve come to the conclusion that this transaction is deeply flawed, and I’ve decided to sell my shares.
Here’s why I’ve changed my mind:
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TSX Approval and Uncertainty: The deal hinges on TSX approval for the financial hardship exemption to bypass the shareholder vote. This process introduces uncertainty, and if TSX pushes back, it could derail the transaction entirely.
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Private Placement Shortfall: As the release states, Big Rock is still $1.5M short of the $6.3M minimum for the Private Placement. If they can’t secure this funding, the deal collapses, and the company could face insolvency. This is a significant risk.
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Massive Dilution: Even if the deal goes through, the dilution is staggering—over 200%. Existing shareholders like us bear the brunt of this, while VN Capital and insiders consolidate control at a bargain price.
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Lack of Alternatives: The board’s failure to pursue other financing options, such as a rights offering or strategic partnerships, shows a lack of consideration for minority shareholders.
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Increased Insider Control: VN Capital’s near-majority stake post-transaction gives them disproportionate power, leaving minority shareholders with little influence over the company’s future direction.
I was initially drawn to the promise of a turnaround, but the risks and governance concerns are simply too great for me to stay invested. For those still holding, I hope the TSX approval and subscription shortfall resolve in the company’s favor, but for me, it’s time to move on. Good luck to all shareholders.