" and others are saying its a risk there will be a shortfall and we will be left underfunded. "
Of course. There's a risk that an asteroid will strike one's house before one has had coffee of a morning. That's a risk we all take. Is it worth focussing on? No. What is worth focussing on IMO is the Board's plan - i.e. the plan to get the company through the next 2 years in 1 piece.
So, as part of the plan, the Board has resolved that it wants a 2-year cash runway accessible to it, and in its hands (& not that of creditors, say, or significant shareholders, say) from this point forward. The question for me - and the only question - is whether that is a reasonable plan from MSB. My answer is 'Yes'. Once I get to that point, I look at whether I'm going to be better off under it.
If I didn't have a view then I'd be on my own on-market. Here, I think I'll be better off.
" ..ddwn saying hes hoping they dont exercise the shortfall provision..."
Me too. Why? Principally because:
(a) I believe its better for a corporation to have a broad church of ordinary shareholders, and not just a few institutional investors; (b) I believe other funding, provided now from other sources, will be more expensive & risky for the interests of MSB's existing retail shareholders - likely in the short-tem & more likely in the medium- to long-term. I don't believe institutional investors operate the same way as retail.
" grainger and yourself saying it prevents takeover and saves costs."
No, it doesn't 'prevent' takeover. Yes, it should save transaction costs. And placement to existing members (one of the factors for the Board to take into account) should make it harder for a hostile takeover to be run against the company. I support the CEO and Board in taking steps to ensure that the company doesn't become an easy victim of M&A raiding activity, or Big Pharma insatiable appetitie, especially at this critical time. Look at what's happening to Athersys, Inc. if you want to see where a promising biotech could end up otherwise.
" ..so not having underwriting is a strategy? or nobody was willing?.. "
Bell Potter are and continue to be quite willing to accept a 4% commission for placing securities which Mesoblast Ltd asks them to place if there were to be a shortfall. So, I don't believe 'nobody was willing' - the risks to be covered are the same IMO.
" im thinking the confidence gained by achieving more funding for their programs outweighs the dilution in terms of the direction of share price. "
I share that view.
Hope that assists.
Cheers GLTAH
MSB Price at posting:
28.5¢ Sentiment: Hold Disclosure: Held
(20min delay)