What has led you to the conclusion to bail? I have quite a large holding and wont be bailing nothing really telling me to do that, but will be trading according to price action.
To be honest Ive seen worse capital structures, whilst the fees for the capital raise are on the high end, I chalk it down to price needed to be paid to get the show on the road, basically I look it as they paid 2 million to get 13.5 million of 'free money' to run the business. Whilst Xcel raise money for the company, they are hardly involved in the day to day operation, so dont know if their characters really matter, they are in finance so a money hungry bunch, its the norm.
The performance rights are an issue, only this first tranche really, dont like how easy it is to hit and the amount of free equity given to Alex et el because of it. I mean 1 million in revenue could be achieved by local newsagency or fish and chip shop, hardly something deserving of 5.65% of equity. I would be curious to know if these performance rights need to be escrowed as well, havent seen that detail.
I think with the average CR share price since 2019 being 4.4c and this one being announced Monday being 5 c, I dont see the share price going below that, so I think worst case looking at high 4cents.
With a lot of these shares in escrow until 22 July This year (including 20 million options excerciseable at 8cents) you would think that they have a lot of interest in having the share price atleast above this at this time.
The character of Alex Keach and management seem solid, havent seen anything dodgy from them and seem pretty ethical unless you can point to otherwise? I know he has gotten a lot of 'free money' and sitting on a nice $195k a year salary as well as these easy performance rights, but if you compare the capital to others on the ASX its nothing really, look at CPH, MXC and CAN, a lot lot more dodgy stuff to point at.
For me the only real red flag is the fact that they are going for another Capital Raising 3 months after the last one, which was meant to see stage one fully funded, had cash in bank to pay for Murray Meds without this cap raise, so really curious as to what will be announced along with Murray Meds financing, they really need to have something extra on the table for diluting shareholders by 14% at such a low price to make any sense.
ECS Price at posting:
6.0¢ Sentiment: Hold Disclosure: Held
