$10 Billion Deal, page-9933

Its now almost 2 months since the last announcement and the vague comments about funding. None of the "any day now" predictions of a deal have proven correct although they provide something to talk about in the absence of any actual new information.

More importantly this coming week marks 3 months since the last quarterly (Apr 26) which inferred that funding should run out sometime around late Oct. Unless something very significant has changed the next report may need to contain a very important declaration, ie that the company has insufficient funds to operate through the next quarter. Whilst most shareholders are presumably aware of this situation, the fact that such a declaration may need to be put in writing to the market may come as a bit of a surprise to many. It shouldn't but it might and there is little doubt it would be akin to a big red flashing light around the stock.

Given the above I'm going to assume that management are smart enough to be on the front foot and not just painfully announce that they are almost out of money but not mention any sort of plan. As such the next week may be quite exciting but may finally reveal some uncomfortable truths. The options as I see them are as follows:

a) Management announce a partner or grant that everybody wants and as I think was inferred in the last announcement. Yay, good times.
b) Capital raising, either a rights issue or placement. Both are contrary to previous guidance, ie non-equity funding. Downward price pressure but not terrible. Sometimes you don't get what you want but what you need.
c) No plan..... ummmmmm?

So the upcoming week will be very exciting because it may be that the veil is finally pulled back and there will likely either be a deal, a capital raising or complete chaos.

Now consider the continuous disclosure rules and (a) is starting to look quite unlikely as the short term answer. I'm hoping for the sake of all shareholders (c) is not even an option under consideration for management so it looks exceedingly likely that we will shortly see a capital raising announced.

So my bet is that we will shortly see a renounceable rights issue announced. Probably with attached options as an incentive. I know some didn't like it when I dared to raise this in late May because back then it was considered a capital offense to talk about any alternative to the party line of a background bidding war and a deal "any day now" but lets face it, reality is no amount of wishing are chasing away the dissenting voices has made this happen.

Lets still hope for a great partner deal or grant but lets be honest about where we are at and how soon the company will need to reveal its hand. Regulatory requirements are about to force the smoke to clear. What will we see? Exciting times.