why the recent sell off?, page-2

They have pretty much said an acquisition is imminent and I would take from the efforts at presentation that they are currently trying to rouse some investor funding to complete. I'm no expert, but I see the price as probably being pushed down as a result of one of the following acquisition-related reasons:

1. Existing investors are sceptical of them being able to find the funding and are therefore worried that they are wasting time and money on what will be a flop... PEH lack of liquidity and short-lived profit history might be factors. However, given that capital is not too constrained at present, I would think this it unlikely that the brokers could not raise funds.

2. Existing investors, who have perhaps made some guesses as to what the acquisition target is, may disapprove of the target business (perhaps it is mining-related and lumped with other mining-services and therefore out-of favour).

3. Existing investors may be being asked to inject more capital and are therefore trying both to free up some existing capital and to obtain a larger share of the company by forcing greater dilution of other holders.

4. Existing small holders like me are guessing an spp might follow a raising, so are therefore hanging back from buying at current levels and simply waiting - therefore no support.

Capital raising is always dangerous and more so for a small and illiquid company. The faster it can be done, the less risk of triggering a price-dilution spiral in the process. It would be good to see them wrap this up promptly! However, once done, I see PEH as a good investment and, given the lack of liquidity, it may be worthwhile for small investors to take a small stake now and hope for an spp to give them a good entry.