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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: MGV who wrote (14199)9/3/1999 5:38:00 PM
From: add  Read Replies (3) of 27311
 
Mr MGV,

I'm in total agreement with your points, but not completely with your conclusion. I seriously questioned(to a few others privately) why VLNC did not do a large deal for say $25M at around $7 rather than fooling around with a little $3M at a pop.

At $7, the dilution would not have been that much for what was received. With $25M one would have gotten more than enough money to completely finish the factory, add more lines, and take care of working capital as production ramped up. The resulting increase in the stock price would have made everyone happy. It also would have taken substantially less management attention to keep doing little dribbles of financing.

However, I think Lev miscalculated on the shorting of shares after July 27th. This was his big mistake. This is where the shareholders have been hurt.

However, it is not forgone conclusion that the shareholders have been hurt more although it may look that way so far. Lets look at the two cases. $25M/$7 = 3.57M shares if done all at once previously. So far, we have gotten $9M for 1.67M shares or about $5.4 per share. So if we get the remaining $16M at a price of over $8.4, the shareholders will have come out ahead.

The fact that Lev is confident of an imminent PO as derived from his actions, may still mean the rest of the financing goes at a much higher rate. The longs may still be better off.

Your conclusion is premature.
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