There are many companies out there with MOU's for company making deals and their SP's are still at or near GFC lows...
LNC is not alone in this regard.
Market right now is in protect capital mode, live to fight another day mode, scalp 2 or 3 pips mode. So in other words Mr. Market is waiting for GCL and LNC to show him the money.
Also, LNC have announced things in the past which have then not occurred eg asset sales / new projects etc. LNC is not alone in doing this. In fact it is a requirement of continuous disclosure for the market to be kept up to date in matters which could potentially affect the SP. Even if it's only PB having a casual chat with a potential buyer over a Chai Latte and cookies in the board room.
Sometimes things don't go as originally planned / hoped... Thats life. Sometimes you have to live with it, like having a kid you didn't plan for. I don't blame PB for any of that.
Putting a positive spin on an announcement is not something only LNC does... Every day I read announcements from companies who do massive cap raisings at a discount to their current SP's which are sitting near all time lows and they spruik the announcement to the max saying stuff like...
XYZ Company is pleased to announce that it has completed a 15% placement to "ABC pump and dumpers", for working capital, conduct a feasibility study, finance potential acquisitions. blah blah
Translation the retail investor just got mined so XYZ directors can continue to collect another pay-check.
The LNC share buy back was an attempt by PB to stop shorters driving the SP into the ground. He was hamstrung by lack of cash to make good on the full buyback, its a poker game, he bluffed, the shorters called his bluff and he had to fold. Nice try though.
The way the GCL deal was structured has been explained (very well) by others here several times but seems we keep going round in ever decreasing circles on the LNC thread...
Put simply LNC could have set the SP for GCL at $5 or even $7 or $10 it would not have mattered in the least...
Why? because by issuing shares to GCL LNC does not have to pay tax on GCL's purchase of LNC's I.P. UCG technology. So linc keeps 100% of the 60M. Better for LNC to keep the money than Jooliar and Goose boy eh ?
Thats Benefit 1.
Next, if the project goes ahead and is successful it then proves LNC's technology works and is commercially viable PLUS it also generates an income stream for LNC so of course LNC's SP will appreciate in value possibly above 4.50 so that GCL could actually sell their interest in LNC and therefore buying the I.P. rights has cost them nothing.
Thats Benefit 2.
By setting the price at 4.50 it minimises dilution for existing holders so therefore that's something you should be happy about. It also respects those who paid far higher prices for their investment than where the SP is today. It had nothing to do with valuing LNC at $4.50 a share.
Thats Benefit 3.
It also makes it appear the two companies are working in a collaboration to achieve win/win synergies. GCL get to expand into a new market and become a big player in a new field outside of their existing expertise. Linc gets free access to a new and as yet untapped Asian market riding on the coat tails of a major player with potential to open multiple UGC sites very quickly.
Thats Benefit 4.
In fact in that entire deal, I couldn't find anything about it I didn't like...
GCL assumes all risk and LNC gets 60m no matter what happens.
The SP is where it is because of ongoing cash flow concerns.
Just one announcement away from putting that to bed is where LNC is today.
Mr Mcgee asked me about previous levels of shorting on this stock... I missed his post, sorry.
The answer to that is here, but the information is delayed.
http://www.asic.gov.au/short-position-reports
Will depend on market conditions but price could potentially drift back into that high volume area around 60 again as a low volume test. I wouldn't rule that out and would view it as an opportunity to accumulate more if it holds.
Would be good to know how far along FIRB is with this deal...
LNC Price at posting:
71.5¢ Sentiment: Hold Disclosure: Held
