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Hal-o no again! – prospective HaloSource investor not re-applying for approval, c. 17 days to stave off insolvency for Woodford dog

By Steve Moore | Tuesday 13 June 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.

Writing last week on HaloSource (HALO), I noted a Chinese governmental approval to enable a cornerstone investment had not been granted and that the investor was now to seek to make another application for the approval. However, I questioned why will the outcome be any different this time? And, even if it is, how long will it take? There is now an “Update on Fundraising and Funding Options” announcement from the company. Uh oh – that was the funding option, so what now?

With also the current cash position expected to only fund the company until the end of this month; surprise, surprise – “the company now understands that the cornerstone investor will no longer make the application because there can be no guarantee of a positive outcome”!

It is added “the company and the cornerstone investor are now in ongoing discussions regarding alternative fundraising options, which would not require an application to be made for Chinese governmental approval, and in parallel, the company continues to explore fundraising options with other investors including existing shareholders. Investors should be aware that there is no certainty that any fundraising will complete, nor of the terms of any fundraise”.

Er, yep – having only circa 17 days to complete a fundraising from the stated position would suggest uncertainty as to completion! Does “continues to explore fundraising options with other investors” also mean a lack of confidence even in the ‘alternative’ discussions with the China investor? Again you are explicitly warned;

“If the company does not complete a fundraising prior to the company exhausting its cash resources, the board will have no choice but to initiate insolvency proceedings and seek suspension to trading of the company's shares on AIM and shareholders may lose all or a substantial amount of their equity investment.”

As I’ve copiously warned before, the stance is bargepole/sell.

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