Yeah, I thought they were going under at the time. They picked a pretty good time to consolidate imo. They got it right. I struggle to see the upside here as they have no plant to make a dollar from.
Had BDC issued 1.5b shares to raise around $100m and was able to borrow another $140m to build the plant, then a 1:10 consol would've made sense as they should never have need to raise further capital and have 325m soi, what I call the CMM model. Their price has added about 70% in the last 4 months since starting production and now have a m/c 10x that of BDC, yet 2 years ago they were worth about the same. The sp rose as the plant was built and jumped once steady state production was met. The market likes a plan that it can depend on.
Now, if consolidation is done for its own sake, then it will fail. There has to be an obvious plan behind it, which we don't have yet. This is why a consolidation should've been part of the strategic review, not independent of it.
The idea that a higher sp will attract bigger investors is a flawed theory imo. If that was true then do a 100:1 consol and we'll all be better off than 6:1.
Hoping I'm proved wrong as I have plenty of underwater BDC shares that will plumb even lower depths if there is no concrete direction coming from the board soon.
BDC Price at posting:
6.2¢ Sentiment: None Disclosure: Held
