My question of illegal activity refers to the financier structuring this deal knowing the result would be a massive price decline & taking advantage of it, either shorting the stock themselves, or getting a kickback from the preferreds, who were guarranteed profit at any price. Of course, this is speculation.
Granted, management is a bunch of idiots with regards to investment banking. This is why they hired Capello & Laffer to do the deal. C & L could therefore be liable for negligence, breach of contract or something like that b/c they did not provide sound advice as they were hired to do.
The best solution i see to this problem involves taking the $10 million odd in cash and buying back the preferred shares from those holders who voted against the change in the agreement & resubmitting it to another vote. Barring that, take a loan and buy back all the shares, but get them off the market.
At current prices, I see a dilution of somewhere around 750 million shares. Given the company's historical market cap of around $24 million, we get a future share price of 1/32, right where we are now. Problem being the common shares are limited to 300 million by the IPO. Is this number affected by a reverse split? Where does Casmyn end up if they are unable to give the preferred holders their common shares? Frankly, it wouldn't be a bad thing if the preferreds took over the company - they were smart enough to get in on this deal & they're probably smart enough to run the company.
--Peter |
