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Is Bracknor spoofing investors to postpone the collapse of the Advanced Oncotherapy death spiral?

By Tom Winnifrith | Monday 20 March 2017

Disclosure: I own shares in one or more of the stocks mentioned. 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.

Death spiral provider Bracknor does not buy shares in companies. It loans the desperate, cash at pound of flesh rates which it then converts into shares at discounted rates and flogs to mug punters. That is the classic death spiral model. But to get such a death spiral away it needs a perception of market liquidity and also to avoid a complete short term collapse of the share price. And that brings us to Advanced Oncotherapy (AVO).

Its shares have collapsed from 65p before the Bracknor deal was announced to just 41.5p (40p to sell) today. Even by the standards of AIM such a collapse in less than a month is good going.

But what is odd is that Bracknor appears to be breaking the habit of a lifetime and actually buying shares in the market as the screenshot below from the Advanced website demonstrates. Issued with c179,310 shares after the conversion of the first £100,000 loan note Bracknor now seems to own 829,410 shares after buying in the market. What on earth is going on?

What, I wonder, would the share price have collapsed to without this Bracknor support operation? The last IR presentation was a disaster and there appear to be no other buyers for this worthless stock other than Bracknor. Had Bracknor not weighed in the shares could well have fallen below the 25p nominal so meaning that Bracknor had no hope at all of getting back the £1.2 million it is owed by Advanced. And Advanced would have had no chance of getting away any more loan notes to pay its bills when the money runs out in the next few weeks.

So the spoof from Bracknor was needed to stop this whole show collapsing. But spoofs can only last so long and what we now know that as well as £13.68 million of loan notes that need to be converted into shares to dump Bracknor now owns another 829,410 shares it wants to dump. This is a material stock overhang on a share no-one wants to buy.

Keep selling. The target price remains 0p.

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