What utter nonsense.
From your post:<<Larry, do you think Castle Creek would have become involved if their factory visit and due diligence indicated that Valence was likely to fail?>>
FMK, given the way the deal is structured, there is no reason for them not to become involved. They can earn big bucks if the price goes up, and they can earn big bucks if the price goes down.
If Valence fell to pennies tomorrow, and never recovered, Castle Creek loses $13M, plus their expenditures, if they still hold the shares indicated in the last SEC filing.
Castle Creek invested to make money, and they make more money if Valence succeeds.
You've been telling us that Castle Creek has been shorting the stock and is responsible for the large short position. But the SEC filings don't back you up. The beneficial ownership counts all ownership interests, including long and short positions in the stock, convertible securities, in the money options and warrants, etc.
The SEC wants investors to know if a very large holder is changing their ownership status. In the 80s, we saw all sorts of shenanigans used in hostile takeovers to obscure actual ownership interests. The SEC has tightened the rules on this considerably since then. In fact, a holder has to even report as beneficial ownership securities held in a trust, if the reporting person is the executor of the trust. They don't even own the securities in that instance, they just control the buying/sellling.
The idea that Castle Creek can dodge the reporting requirements by selling short shares, instead of exercising their convertible securities, and selling their own shares, is nonsense.
The bottom line is there is probably over a million shares short on the stock, much of which was shorted in the 2-3 months before the Barron's article. The daily volume is drying up to where it would take over a month to cover at recent average trading volumes, assuming shorters managed to buy half of the shares changing hands. If we get positive news, there should be a quite interesting short covering rally.
Paul |
