I suspect the "lender" will be dumping the bought shares and soon.
Perhaps. The action in Corel has been interesting so far, to say the least.
Then you'll see the real impact of the dilution this deal generated.
Quibble. If you attribute a fair value to CORL in the neighbourhood of (say) C$2, then this deal has not diluted per-share value, because it has resulted in more than C$2 of value (in the form of cold hard cash, no less) being injected into the company for each new share being created.
Accounting stuff aside, if the alternative was for the company to go bust and the shareholders to (soon) be left holding worthless stock, then doing this deal was probably a net positive for existing stockholders, even though it resulted in a big batch of stock being sold at below-market prices. Toxic as it was, this deal's alternatives were probably worse.
On the other hand, I suspect that this cash infusion will simply delay the inevitable -- they'll piss it away, hacking and slashing 30-40-50% of their (best?) staff in the meantime, and face the next cash crisis soon enough (though as a leaner and meaner company ;-)
IMHO, the near-term damage to the stock price from this toxic equity deal has been done. The game will go on for another inning, now that they have twenty million more to burn....
- Daniel |
