Yes unsurprising Gertler wanted his pound of flesh - Very annoying that the company rolled over and gave it to him. One would have to wonder about the problems they must be having firing up the smelters (ie their main source of cashflow) at Kinsevere and also how big the need to have another heavy on their side for the license negotiations if they are forced to do a bargain basement deal like this. Original deal = no problem - This new deal = highway robbery - However who else is going to give cash to a single commodity producer in the DRC? (Again do they need cash that desperately?)
Also very annoying to see the old "39% premium to last traded price" rolled out - HANG ON - wasn't the last great deal a 27% premium to the 30 day VWAP prior to the day of the announcement!!?? Do they think we're stupid or something?? And note this mark was the absolute lowest AVM has traded in the last two years!
On this new deal the 30 day VWAP happens to be $8.99 (going back from August 20) so on the same terms (27% higher) the issue price should have been $11.42. So the company is now only issuing them at a 11.23% premium ($10) so they've been screwed (and us holders diluted) to the tune of 16% not taking into account as well the fall in AVM's share price.
So to sum up, a double negative:
1. Price of Anvil has gone down so cash raised goes down 2. Terms much more attractive for Gertler.
And so the long suffering shareholders get screwed again
Cheers
J.
AVM Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
