Hey mate,
My thoughts are :
The US investor route was never the “ideal route”.
I believe the company may have thought (and rightly so) that the PPL being granted would have sparked a much stronger response from the market, leading to perhaps a straight CR with holders/instos.
With the price where it was post PPL, the deal with the US investors meant cash up front (kicking on with Stage 1 being paramount), but a couple of months to get the SP higher so that the first tranche is essentially at well above 20c per share.
The “trading restrictions” in place were likely on a handshake, with the following tranches at risk if they went outside of these restrictions (because obviously, they’d keep the SP suppressed to pickup cheaper shares in the following tranches otherwise).
I believe, as has been indicated in interviews, the conversations with the Koreans and other entities were progressing well, and they may have underestimated timelines to secure a major deal (thinking perhaps that they’d announce something within the 2 month timeframe).
This deal was a surprise, but however it came about, there were reasons for this.
If the US investors were continually selling down, last thing we want is the selling pressure post Announcment (particularly of this magnitude), all so they can secure cheaper tranches 2 and 3.
It secured funds upfront and, with the exercise of the options, guarantees Stage 1 is covered (plus feasibility of Stage 2).
So very likely that they also wanted to steer away from “needing” the US investors ASAP.
This recent raise also puts them in a strong cash position, for the negotiations with the Koreans.
70% has been indicated, but the 30% will have also surely been discussed (a huge risk for the Koreans if they can’t secure the additional funds). So this cash in the bank also puts them in a stronger position for “those” discussions too.
We now have institutional investors onboard …. It would have been much more difficult to get them onboard POST Announcment (why would they invest when the enormous upside has already occurred) ?
So I think it was a combination of things, they’ve mentioned discussions with multiple parties ongoing …. So this deal was the safe option, and the right option at the right time.
These new shares on the market now have a vested interest in a much higher SP … particularly for the options to be in the money.
All IMO
Cheyne
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