Yes, I think there may be a case for investigating the timeline of play:
1) Was the deal with Turkey for financing legitimate? It was expressed as such, that that source of funding would ensure GSL's future - To what degree did management inform/misinform the market about this investment? - The language in announcements referred to regulatory situation, setting up bank accounts etc but should be finalised shortly. How accurate was this language? If the deal was inked, a 'Signed subscription agreement', but a month later GSL withdraws from the agreement for failing to reach terms, what then actually was the 'signed agreement'? And why didn't we sue the Turkish lot?
2) It takes money to raise capital, so understandably it can't be raised when the company is insolvent (e.g last weeks of trading), so the question is, when did it become apparent that there were no available external sources of funding and how does that play into the timeline of raising capital from current investors?
3) Was selling the materials business legitimate? Selling to an insider is questionable...should it have been put to tender?
4) The ongoing language used about the state of the business is questionable in all the investor reports/ quarterly reports. The final announcement before administration used terminology such as: "GSL is pleased to provide...Significant progress has been achieved...payments to be received over the next 12 months...pleasing sales growth...improved confidence...."
I don't know the laws, can a company raise capital whilst shares are suspended? Since GSL was in a trading halt though, there was no trading on the above information. If the shares had been listed and the above language was used immediately prior to entering administration, I think the case would be more direct. So that raises the question too of course, was it necessary for GSL to be in a trading halt?
Arguably, raising capital isn't 'harder' per se if a share is trading. A dollar is a dollar, whether that dollar buys one share or a million shares. The only impact in raising capital on a depressed shareprice is dilution and thus a loss of value to current holders, salvaged though by the fact that the company can remain operational. That the company did not relist after failing to raise capital and take the shareprice hit is questionable. Questionable because of the ongoing positive terminology used by the business (as above), and questionable because it meant everyone went down with the ship...
(Only internal documents could reveal the true situation)
GSL Price at posting:
17.0¢ Sentiment: None Disclosure: Held
