Here is what should have happened totally hyopthetical;
FW was under pressure due to shorting, he knew he was going to be targeted by them on the slightest bad news. If you review sale of Proactive majority to Nestle , the number one pimple cream with advertising of 200 million a year minimum, you can see why they would not promote a more natural alternative to this. FW had every reason to explain this to shareholders. I have researched Benzac and the product was very well reviewed by users. It was a hard bullet for FW but at least he had really good reasons .Instead he justified to his" bereaved angry terribly frustrated by shorters CEO self", that given it was not in forecast earnings it was not material and could be left out. He would find other sources.
With the China wood contract ,his excuse probably was he would quickly find another k. By march he was doing this actively, and there had been no financial impact.He knew any bad publicity would impact those negotiations and he had the Galderma K to deal with. It was a race against time. Then it was too late.
I have no doubt there would still have been a shorters report if he had disclosed , hopefully they would have changed name quietly not courted the drama. they would have been able to fight back with and strategised better rather than run for cover.
Share price would have been stopped at probably 80 cents before capitalization talks.
Good will and reputation very much more intact. Control damage possible.
He is a good man who under duress, made bad judgments.
The only way for better protection is to make the wording for requirements to disclose clearer. Connecting it to "could or may materially affect" share price leaves too much discretion with the company.
The good news is just in the last twelve months, you have had non-disclosure class suits on many highly recommended companies. Most are still very much ongoing concerns. FW can offer up half his plantations, many coming up now for harvests and still make a profit on the remainder versus receivership! Seriously there is just too much too lose for too many people.
QIN Price at posting:
29.5¢ Sentiment: Hold Disclosure: Held
