By Cynical Bear | Friday 19 May 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
I’ve been away for a few days so just catching up on matters and first things first, I need to pick up my normally excellent colleague, Steve Moore, on a couple of glaring ommissions in his piece on Kin Group (KIN) and its funding announcement earlier this week.
First, it is rare in the world of AIM that journalists are provided with such a glorious gift with Fitbug’s name change to Kin Group and it needs to be exploited at every opportunity. As Wildrides has spotted, the name Kin can only be used in headlines in a specific way such as in the headline to this piece or along the following lines:
- ‘Kin useless Board of Directors
- ‘Kin waste of space – fire them all
- This is ‘Kin killing me
I’m sure you get the idea. This is one of the few journalistic organs that can actually use that gift in its headlines and so I hope to never see again the likes of: Kin Group – bailout funding reviewed (read Kin Group – bailout funding reviewed (with help from Nicole Scherzinger) HERE).
Secondly, and let’s get into the meat of the announcement, I like to think I’m a bit of a connoisseur when it comes to the various death spiral funders so when I saw a new name in the RNS, namely Belastock Capital, it got my spoof antennae whirring.
Now in much the same way that the fact that Fitbug has changed its name to Kin Group isn’t going to make a blind bit of difference to the outcome for shareholders here, a death spiral funder by a new name is largely irrelevant.…or is it. Let’s look at the details.
The basics of this variant are:
- Notes issued in four tranches at a 10% discount to face value;
- Converted at either 125% of price on issue or “the lowest closing bid price for the Company's ordinary shares for the three consecutive trading days ending prior to service of the relevant conversion notice”
- Each share converted leads to the issuance of a warrant which can be “exercised within three years from the date of issue at the lesser of (a) 90% of the lowest closing bid price for the Company's ordinary shares for the three consecutive trading days ending prior to service of the relevant exercise notice and (b) 125% of the price at which the relevant Notes were converted into Conversion Shares resulting in such Warrant becoming exercisable.”
Hmmm, that all sounds a bit familiar but who could it be?
Well, it’s not Crede Capital as it likes to obfuscate with nonsense about Black-Scholes pricing as Amur Minerals (AMC) and Vast Resources (VAST) shareholders can testify.
It doesn’t look like the standard wording from the likes of Darwin, Bergen or Yorkville which are pretty consistent with the formula based on a 90% of an average lowest VWAP over 10 or 15 days.
Hold on a minute, I’ve got it. The only death spiral funder that has used the lowest of the last three days closing bid as part of the formula is the darling of the wellness sector itself, L1 Capital, which provided almost identical terms to CloudTag. This is arguably an even better version, for Belastock that is, as there is a three day window on the warrants rather than just the one day as with CloudTag!
Now clearly, imitation is the sincerest form of flattery and it wouldn’t take much for someone of this ilk to have identified that this was such a money spinner for L1 Capital that they would use the same formula. However, I wonder if the company would like to clarify whether there is actually any connection between L1 Capital and Belastock Capital?
Course it ‘Kin won’t!
Never miss a story.
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