I took a closer look at the funding announcement and outlook.
On one hand, I get the impression that the management have tried to limit dilution and selling by stating that they have the right to terminating the agreement at any point with a termination fee, or at the specified floor price. However, as someone else pointed out, what is the floor price? Perhaps stating the floor price would in itself lead to a SP collapse.
The conversion rate is at a 10% discount of the VWAP in the days preceeding. The firt tranche is over 32 million shares, which by my calculation, and not taking into account options etc, doesn't actually dilute the share price that much, but it's still more shares that can be sold. They can also convert up to 92 million at a share price of 2.9c. However the announcement also states that the company says the agreement has terms limit the ability of Bergen to dsipose of shares. So what are the detials of this?
Despite the downside of this deal, there is still the fact that without it, there was no money in the kitty to keep going. Simply, we shareholders need a market update to know what is really going on. Is silver being produced, and of course, are we locking in prices into the hedge to develop profit?
It is not in the directors interest to dilute shareholder interest. I'm sure JP morgan would be wanting to know what was going on too. Also, AYN is certainly not in the same boat as compass, that got themselves heavily indebted.
AYN Price at posting:
1.6¢ Sentiment: Hold Disclosure: Held
