still got options
If I was in charge of LUM this is what i would be trying to do.....
Option 1 - Negotiate a favourable sale price for 4TS. LUM need the cash more in the short term than rental income. Try to get Durst into a deal to fill in the other 3 sides. This would give LUM much needed cash for the short term and increase exposure of their product. I would then pump out the signs for outright sale UNLESS there is a guaranteed short term to market with the current joint venture model as it reported to be the case with DEFI. ( I suspect LUM may have missed out on a some opportunities because they prefer to joint lease rather than sell outright). Try and write ongoing long term servicing agreements at a fixed price into the sales agreement, say $20k-50k per year per sign for 10 years with a guarantee.
Option 2 - Agree to drop the advertising price at 4TS to such a level that is simply breaks even over the next 4 years and then walk away from the site at the end of the contract with Durst. This could force Durst to purchase the sign outright, particularly towards the latter part of the contract. Again start agressively pushing a sales model to pump out signs and boost cash reserves without needing to dilute the stock further.
Option 3 - Capital raising. At the present time LUM would only be able to ask about 4 or 5 cents and would find it hard to get a broker to take them seriously. They would have to float 80 million shares at 5 cents to gain an extra $4 million in working capital, this would take the total shares on issue to around 200 million and is my least preferred option. Hopefully they would then change the business model to one of preferring outright sales and servicing and move forwards from the torture of the past two years.
LUM Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
