It's clear from looking at this deal that it's a bad one for shareholders. The insiders of the company, along with some big investors, and with the complicity of the TSE and the OSC have basically pulled off a takeover of the company. They will now control so much of the company that very little will be left for small shareholders. The money raised will not take them very far as they have debt of over $5 million and what's left will not last very long. But the insiders don't care because with effective control they can take control of the company even if it fails.
What is particularly concerning is the fact that they decided to override shareholders' basic rights by obtaining a waiver of Policy 9.1 which would have forced the company to hold a special meeting of shareholders to obtain approval of this deal. Any company that does this sort of thing is frankly not worthy support.
The dilutive impact of this deal means that it will be impossible for DMW to ever produce meaningful earnings. With this many shares outstanding, a Net Profit of $2 million (highly unlikely) would produce an EPS of less than one cent per share. Management is not concerned about this, what matters to them is the fact that the company is still in business and they keep their positions and salaries. Shareholders can expect a 10 for 1 share consolidation in the next few months.
The other big concern is a moral one. When the company announced the trading halt back in January, they said it was based on humanitarian concerns. Most shareholders thought it was related to the hostages but it is now clear that the real reason they sought a halt was the increase in share price had them concerned about this private placement. If the stock went too high, it would make accepting this PP very difficult for shareholders. So the company panicked at the sight of the sharp increase in share price and asked the TSE for the halt. They then lied to shareholders about the reason, but today we know why. Frankly I think this is incredibly despicable, but not surprising when you see who's part of management (Friedland and company).
And to think all this time we thought it was for humanitarian reasons. The only humans they were concerned about were themselves, see how they dismissed the hostages with a cursory paragraph at the end of the press release.
It's another sickening example of why it is wise to steer clear of these small resource companies. They are run by shady characters with loose morals. I guess the moral of this story is -- if it's a small resource play, based in Vancouver and migrated to the TSE from the VSE -- AVOID.
Lesson learned.
Good luck to all of you and those of you who remain shareholders, call the OSC and the TSE and demand that the regulatory process be followed and this thing be put to a vote. |
