One problem here that has not been mentioned in the debt plus Cap raising is that COW are currently sitting at 19.9%.
They cannot contribute much to any Cap raising at all because of risk of setting off T/O regulations. So the question really is how can they state to Minsheng (aren't they in the same group anyway?) that they will support the loan?
They can't go for extra equity unless others do first, they probably don't want their existing position watered down.
In other words, their support is very messy to start with, unless it was a straight loan unsecured (because Minsheng have everything mortgaged) to the company. That clearly wont happen as it is poor business to do.
So the real question becomes what do the largest shareholders want? Assuming for a moment that it makes money in the future, what is the best outcome for the big 3?
Obviously it is that they own as much of the company as possible for the lowest price. Where does that leave the other 66% of shareholders? I'm afraid in a very bad place unless they can get 50% organised together. But, but,but....we have 3 separate Chinese businessmen that own about 6.5m shares each which theoretically are not connected with any of the other Chinese groups, so their shares could really count.
What would anyone pulling the strings on the future realistically do to gain a better percentage of the company at this particular point?
My opinion. Do a cap raise at an unrealistic price, then not participate.(they didn't participate in the last one in 2013).
Let the stock trade. A failed cap raise,(only a few million in) makes price plummet. It also gives a little more money to build a bit more of the plant.
Bank states not enough to lend more, raise more equity.
Repeat first attempt, but big boyz short sell to drive price below raise point, a few more million comes in with great dilution. Not fully subscribed, price plummets again (still).
T/O offer by COW, raises their percent of company. All Chinese miraculously agree to T/O offer, COW have 60-70%+ of company, maybe more (I'll bet my bottom dollar there agreements in China we know nothing about).
They then another cap raise at strange price, virtually no one participates except them to get percentage over 90, game over, compulsory acquisition of rest of shares not already owned.
Or something like the above to get the rest of the company cheaply. They are not fools and care about themselves NOT other shareholders. Any thinking that they will do what is in the interests of ALL shareholders is naive.
