Thanks for pointing out the other details, Marty. Now I see how the Segalls and Mr. Waitz participated in the Rights Offering.
I understand that a rights offering is not a preferred way to keep a company funded. You're hitting up the shareholders individually for more money just to keep their shares. It could conceivably be preferred to standard financing when the shareholders need just to tide over their as-yet not performing gold mine. But it places the entire risk on the individual. Paul and Judith Segall and Harold Waitz borrowed $368k, $122k, and $353k respectively for the Rights Offering. They had shares to collateralize the below market rights cost, so it might not have been that risky.
I think most companies obtain additional funding in exchange for equity. Of course, this dilutes their shares, but the re-distributed risk/reward is more standard. Of course, the major shareholders of Biotime could have preferred the Rights Offering, especially if they were extremely bullish on the company.
I'm not sure why 90,000 pre-split shares (=270,000 current shares) are used as collateral to a $368k loan. I'm also not sure why Paul Segall and Harold Waitz each borrowed $9.22/share to exercise 21,000 pre-split options, without intending to sell in the short term. It seems to introduce unnecessary risk, as they used their shares as collateral to exercise the options. Why exercise?
Could anyone help clarify the (possible) scenario?
Thx,
Steve
btim.dyn.ml.org |
