Re: Is it possible
bluejay,
How does a reverse split make any sense? Let's speculate:
The BoD decides for a 1/100 split. The common shareholder with 100,000 shares now has 1000 shares worth $3.12/share or $3,120. Now the BoD starts distributing (selling or using for Management incentives) 680,000 additional shares to raise money to make the loan payments. The share price will drop to about 1/7, and said stockholder will own 1,000 shares worth about $446. Time passes, and the stock goes up $0.10/share. In the current situation, the price goes to $0.131/share and the stockholder now has $13,100 in equity. With the increase of the number of shares and the reverse split in the above example the increase of $0.10 makes the stock $3.22/share or a total of $3,220.
Will the availability of 680,000 more shares of common, or the sale of 20,000 shares of F Preferred save the company? I think it will just give Management more time to milk whatever value is left in the Portfolio. Can Novation buy another company with the new capital? It will take an income of over $7,000,000 a year unless the creditors agree to a haircut.
I think most holders of the common will vote NO on the share increase without having a real plan presented in the final proxy.