By Steve Moore | Monday 17 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.
Following a far from routine “Third Quarter Trading Update” last month which saw shares in Plant Impact (PIM) slide, they recently looked to have stabilised at around 35p – that was until Friday when they strangely slumped to sub 30p. Or is that now ‘strangely… until today’?
This is with a “Full Year Trading Update & Potential Capital Raise” announcement from the company. Hmmm, I wonder if the “potential capital raise” will be at 35p+ or a good bit lower?
“The group's cash balance at 31 July 2017 is expected to be around £3.2m. The company's commercial business plan for next year anticipates good cash flow generation”. Sounds alright then. “... before investments in research and development”. Ah. And “the company now has a significant number of product development projects in the final stages of pre-commercial testing”. It’s capital raise ahoy then – and;
“The board is considering an equity fund-raise of a minimum of £2.0m, for which it has received an indicative commitment for the full amount from an existing institutional investor at a price of 31.0 pence per share. In addition to this commitment, the board would consider placing an additional £2.0m of new funds at this price and as such the company will be meeting with existing and prospective shareholders shortly to identify any additional interest.”
An indicative price of 31p hey. Natch, nothing for the regulators to look into here though – move along please! This part of the announcement is also left to the end – with it commencing by noting contract discussions with partner Bayer “continue to progress positively but are expected to take some time to conclude”. These ‘discussions’ of course relate to “higher than expected” inventory levels and “challenging industry-wide trading conditions”.
It is now noted that “to reduce current stock levels in the market, the company has agreed to cancel early season shipments previously anticipated for July 2017”… but no need for concern as Bayer has set end-user sales targets anticipating strong growth for the 2017/18 growing season, which have driven an agreed plan for new purchases commencing in the first half of the year ending 31st July 2018.
Hmmm, the need for the current contract ‘discussions’ sees me view promised jam tomorrow here even more sceptically than normally, and together with the noted share price movement, this is certainly one I currently continue to avoid. Meanwhile, regulators Hello there…
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