VLA (ASX) Orbimed

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It's not about whether Orbimed is a good insto to take up shares...no one is arguing that point. But it's nice to see that they believe VLA is a good investment - we realised that years ago.

The issue that Stevo has just pointed out, plus others before him, is that issuing a large share of the company's equity at low prices:
- dilutes our own shareholding considerably, making our holding worth much less
- is offered at a heavy discount to what they would have to pay for the shares on the market, so it's discriminatory against us. Can you imagine what Orbimed would have to pay if they wanted millions in VLA? They would have to push the price over $1 ....wouldn't you prefer that to happen?

And the absolute stupid thing about the cap raising is that it is not required now. (The last cap raising, which diluted our equity by nearly 50%, according to directors would fund VLA until the end of 2016.)

If directors publish a report giving details of expected cash outflow in the next six months that adds to more than $15 million, then I will accept that they need to raise cash by Q1, 2016. But there is no chance that will happen. I doubt they will spend even $10 million in the next six months...so we would still have around $10 mill in the bank by next June. THEN is the time when we should raise cash - at a cost perhaps only half of what we are giving away our shares for. There is no justification for blowing away existing shareholders entitlements.

If I were advising VLA, of course I would be disposed to say, get some cash now, we will help you, I know Orbimed and a couple of others may be interested at a low price, and by the way, I'll charge you 5% ($1.5 mill) for the conversations. (By the way, would be very interested to see who actually received the break-up of the $1.5 million)

My question to all those posters who think it prudent of the Board to increase the cash at bank this month from near $20 mill to over $50 mill, but dilute your interest by 25% - "if you owned the company, would you wait a while for more good results and a likely much higher share price, or would you go today?" I think most would prefer to wait....getting cash now is like advising your client years ago to buy IBM...no risk, but not the smartest move.