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|They had to get financing completed this month or pay back the £11M or whatever it was they have already received from Metric - and not get the rest of the money. I am hoping Metric's money will last until testing is complete, but I am not too keen on the new debt having a minimum requirement followed by an option of much more dilution.
Is the requirement that AVO MUST draw down £13M?
And they have the option of another £13M within 2 years - and if they take the £26M within 2 years, they can have another £26M on the same terms? I note they must take at least 20 days before each £1.3M tranche - I really hope they don't need to spend that much money so quickly.
"The company has the right to refuse up to 2 calls". What does that mean?
The company is AVO and the drawdown is done at their discretion, so what exactly is being refused? I have looked at put and call options, but still not clear as to what is applied here. Is it AVO can twice refuse warrants to be exercised?
I need to clear some time to make sure I get this straight, but any tips most welcome.|
|Drawdown no doubt needed to pay the salaries this month. Shows how desperate AVO were: proof one again that Bracknor were the lender of last resort.|
|On my calculations Bracknor has 2m shares to sell then, based on a conversion price of 65p announced 22 Feb? It states in todays announcement 'Bracknor is prohibited from short selling ahead of any conversion notice, being the notice given to the Company that Bracknor wishes to convert the loan notes into AVO shares' which means Bracknor in future tranches will notify the company, it will sit on the information, Bracknor will forward sell and close off the position. I not sure if I trust a single word the company is making, just like the non dilutive loan which never happened and the Chinese contract that walked away.|
|Harley St was a strategic decision upon which shareholders were not consulted and a mistake which led to the now disastrous Metric deal all built on the sands of testing hope.
Just an example of trying to run before you can walk. On the subject of walking its the near 2 month delay in testing and the faiure to give hope to Sinophi or lenders that testing will conclude anytime soon that has hit the share price and led to this latest dilution bad news.
|Another thing that bugs me about the management, is why Harley St as a location? Full of high paid consultants yes, but this sort of treatment is usually done by the NHS or private hospitals. I'm sure people are aware, but just in case not, UCL Hospital no more than 20 min walk from Harley Street are currently building a Proton Beam Therapy unit, due to open 2020. I'm sure the NHS will gladly take private patients to help pay for the cost. Do we need two so close to each other? Bit daft IMHO|
|Yes, TW maybe wrong and the price is holding up well, all considered. I would really like to see this product work, as the current ones are massive and too costly. It's the board of directors which annoy me. The greed is laughable. They have 175m options at 8p or below. The bonuses paid are outrageous - £600k - the top three directors paid themselves £1.3m and that's not including all the other expenses. The bottom line is IMHO no one would cough up any money at anywhere near today's price and that includes existing investors. Sack the lot of them, but I think time is running out|
|TW is human like the rest of us. And I can't help seeing that once he makes a decision about a company, then every (relevant) piece of info is used to reinforce that decision. "Complications" are not allowed to get in the way.
I also quite often don't understand why he gloats on a falling share price, as we liitle peeps maybe suffering a loss. Yet it is we little peeps who he then wants to SELL product to. ie tips and all the rest.
Anyway he knows a lot more than me, and he gets some spot on. But plenty wrong too.
I am crossing my fingers that he is wrong on this one.|
|Maybe I am one of those BB loopers TW often mocks. (Well I bought MIN two years ago on TWs say and I'm still waiting on pay day...and NIPT at 18p, er what happened there then...anyway leave those aside)
So the simple principle is we borrow the money, Bracknor get shares. But before Bracknor get their shares, they short the share price and then settle with shares they have been given. Then at the lower share price they get even more shares for the same money and repeat. And the share price disappears to south pole.
TW compared us - even more unfavourably - than another Co, sorry can't remember name as I write, who apparently travelled same route.
But I think there could be factors that will prevent a death spiral here. Firstly what if Bracknor get their fingers burned in shorting (maybe not appropriate analogy in this case...maybe unsucessful endeavour). For example our Swedish(?) friends who invest long term and develop Co's. Who own more than 4% at much higher share price What if they actually keeping buying....SP will hold up - especially if funding sorted. And other key investors too.
Also, we have a close relationship with organisation that is truly at the cutting edge of a branch of science. We also have number of high profile/credibility/qualifications people who believe they understand and have what could become a world beating transformational technology. (mind, perhaps a few more hard-headed savvy pure business people could have avoided recent woes)
I think those two points may help attract new investors - now that funding is sorted - and support the share price to go a bit more towards the north pole!
Anyway, who knows, as we reach a critical point for proven kit development. We may get taken out.....hopefully at a much, much, higher price!
Just a few thoughts. Go on, all yell at once. Maybe TW too with his own ID.|
|Jaknife - I suspect they'll still be left with 29% as there won't be any buyers by the time they've finished with the company.|
Re: "By which time Bracknor will own 29% of the company and have driven the share price down to buttons"
Bracknor will own 0% of the company. They have no intention of ever having a material holding. They will sell short in advance of conversion and use the shares received from conversion to close out their short position.
|what is to stop AVO doing a Valirx and dropping the deal once AVO no longer needs it?
Nothing, except that they will need all of the Bracknor money to get to that position. By which time Bracknor will own 29% of the company and have driven the share price down to buttons. And own sufficient warrants to have effective control of the company.
Make no mistake, Bracknor control this company now, and any slipups will just give them even more power. Anyone investing or retaining an investment is very brave....|
|This really is bad news. AVO has done the rounds and couldn't generate enough interest to do a placing (well possibly at 20p), so has gone down the worse possible route IHMO. It is in the midst of a very capital intensive development stage (reminds me of Flowgroup) and can't just stop. They really didn't do themselves any favours with Sinophi, as it over promised and didn't deliver. It all come down to cash and whether it can regain credibility. It YE is 31 December and it doesn't take a genius to work out it is running out of cash fast. They know if they hadn't done this finance deal the auditors would not be able to sign off the company as a going concern. Unfortunately, it can't reduce costs to slow the cash burn down much, as it needs to spend to make the product work otherwise it has nothing. Even if it could slow down development, it has massive fixed costs (wonder if the directors will forgo their large salaries hmm most probably not) I don't think it has any other choice, but to carry on with these draw downs from Bracknor, as the directors would have tried every avenue before going with them. It needs the cash to try and deliver a product, catch 22|
|I've read TW's comments and I think I understand what he is saying. I admit it doesn't look good.
However, If the package enables AVO to bring LIGHT to market and it is the success we hope it might be, what is to stop AVO doing a Valirx and dropping the deal once AVO no longer needs it?|
|Yes, just as I said earlier. He does seem to steal my thoughts.|
|I have not checked his maths, but it seems about right.
The key issue is whether there are enough people willing to buy the shares Bracknor dump each month. CTAG mug punters have absorbed about half of the shares to be dumped in about 4 months with a 66% reduction in shareprice. There may well be another 66% to come on the next half. AVO does not have the rabidly stupid PI base CTAG has, thus the shareprice is likely to get hit much harder and quicker.|
|Bracknor has a track record....
|Igbert>> Quite! note the word "hope"|
|It's slightly better than the typical death spirals but yes it's a death spiral. The process will be:
1. The Investor (Bracknor) will subscribe for a bond worth say £1.3m.
2. Bracknor will hedge themselves by selling short shares over a period of x days.
3. They will then issue a conversion notice which will convert at:
"The Conversion Price will be equal to the lowest daily VWAP (Volume Weighted Average Price) during the fifteen trading days preceding issuance by Bracknor of a notice to convert (Conversion Notice);"
4. And use the shares so received to close out their short position. Go back to step 1.
The relentless selling will have the effect of pushing the price down, which is in Bracknor's economic interest since that's how they will profit the most.|
|Not quite as bad as the CTAG death spiral, but pretty grim. However, there are far fewer mug punters here than at CTAG so the forward selling before conversion will hit the shareprice much harder than at CTAG where it has only reduced by 66% since the start of their deathspiral thanks to all the ramping that continues to suck in mug punter money.|
|twirl - err... are AVO the sort of company that spend less than they forecast ?
The 29% will be hit - the market cap is currently less than £50m so borrowing £26m will put them over 30%, even before all the fees and warrants.|
|Why not just give the money directly to the directors , that's where it's heading anyway ... pay for nil performance scheme|
|So why have the option if only expect to draw down a portion? Gives the wrong signal and market knows this|
|Igbert>> Presumably they hope not to drawdown too much and so avoid 29%|