Having thoroughly discussed the meaning of “imminent” used by Jed Latkin at the 1st quarter conference call in May, we are 5 days away from the 2nd quarter CC without a partnership announced. My theory is that Latkin is trying to negotiate a fair deal, and the other side is trying to rape and pillage the company they know is weak. Why pay real money for something that could be picked up for pennies after a bankruptcy?
The company needs money. Here is a path to that money.
NAVB should do a rights issue. The company could offer rights to the existing shareholders that give them an opportunity to buy additional shares directly form the company at a discounted price by a certain date rather than buying shares in the secondary market. The number of shares an individual can buy would depend on the number of shares currently owned. The “rights” can be traded like shares.
This is an example of how it works. Suppose an investor owns 100 shares worth $10 per share or $1,000 worth. The company has issued a right to buy 2 shares for every 5 shares owned at $6. The investor buys 40 shares [2 * (100/5)] for $6 or $240 worth. The company receives the $240; there are no underwriting fees.
Before the dolorous cries of the Greek chorus begin, let’s look at the compelling reasons to do this. If the potential partners are waiting and hoping to exploit NAVB’s weakness, the company’s having money in the bank and a clean balance sheet will drastically change the negotiations. For all the innumerable times posters have complained about some insider or underwriter getting a sweetheart deal, now those shareholders can get themselves shares at a discount. For all—institutions, vendors, investors, potential employees—who are shying away from NAVB because the company is so weak, those concerns will be eliminated.
The next post: how much money could NAVB raise?