By Tom Winnifrith | Saturday 8 July 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.
Back in November 2015, Plethora Solutions (PLE) the AIM listed developer of a treatment for premature ejaculation run by offshore based asset stripper Jim Mellon was almost on its uppers, its cash position was critical and its share price had collapsed. Refinancing would have been impossible so it was announced that Regent Pacific, Mellon's Hong Kong based vehicle which already owned 28% of Plethora having chucked good money after bad, was to launch an all share offer worth 12.5p per share. I warned that was too good to be true HERE. And so let's wind forward 20 months...
The offer was of 15..7076 Regent shares then trading at 9.5 HK cents for every 1 Plethora share - at prevailing exchange rates that was 12.5p per share. Since then Regent shares have collapsed. Its own cash position has weakened so much that it had to do a rather strange sort of placing arlier this year. The shares now trade at 28 HK cents but that is after a 10-1 consolidation in 2016. So in effect the Regent share price has collapsed by 70.5% since the offer.
That means that the paper value of the Plethora shares is now just 4.3p at current exchange rates.
But it gets worse, shares in Regent seem to be falling fast - the placing on March 29th was at 40.5 HK cents. For shares to have slumped by more than 30% below that placing price. The PE drug Fortacin was launched in the UK last November but for some reason Regent has appeared reluctant to give us any data on sales to date. I can't think why.
Of course Plethora is not Regent's only hope. Like all Jim Mellon companies it has invested heavily in the Diabetic Boot company owning 22% of its equity. Its assessment on March 29 of this year was very upbeat. Readers of this website know that DBC has massive problems and indeed already had real issues back at March 29 2016. Presumably, as some stage, Regent will be letting its shareholders know about that too.
It goes without saying that if you ignored my earlier advice that the 12.5p nominal offer was illusory and are stuck with Regent Pacific stock you should not be hanging around. if the UK launch has not sparkled than if the 2017 operational cashburn rate matches that of 2016, there will be another placing needed this autumn. Ahead of that the shares remain a stonking sell.
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