Would anybody stump up $50mil to buy up Starks bonds? That's an interesting question. I think it would have to be someone with enormous faith in the product and the potential market.
As things stand right now, there is a disturbing lack of sales which management have not been able to explain. They reckon the markets that they already have approval for (and have been able to sell to for at least 18 months) are worth $45mil, and they have had the capability to supply at least $6mil worth of product for the past 15+ months, but actual sales have been no more than $315k.
Also there is no publicly available information about what the margins and profits could be like. Preliminary figures from the Dec 2005 half year report suggest gross margin could be as low as 10%. This would be reduced further in the situation that a third party is doing the manufacturing. $50mil could be invested in other companies with much lower risk and much better returns than that.
Finally, at the most recent capital raising before the bondholder money, only 25% of the raising from the public was successful, people were ony willing to put in about $6mil, and this was at a time when things looked much better and the shareprice was $2.40
The timing of Starks actions is unfortunate, approvals for other countries/markets may be just around the corner. CMQ have previously said they have up to $4mil of orders from Australian customers ready to go as soon as the approval comes through. With other markets opening up someone would likely take a more serious look at putting in $50mil
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