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Obtala: When is an equity Issue not an equity issue?

By Evil Banksta | Sunday 13 August 2017

Disclosure: The author has a short position in one or more of the shares 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.

When the cash still hasn’t arrived! Tom Winnifrith gets upset (see) when I write negative comments about Obtala (OBT) and so I’ve kept quiet for a while, but there comes a point when you just have to ask the question: WTF is going on? Since Tom believes in free speech (as well as Obtala) he - as ever - allows me to write here.

 Back on the 28th of March Obtala announced a placing to raise £4.0million at 20p a share.  That placing was unusual in two respects, firstly the placing price was at a premium to the then share price (17.5p the day before) and secondly the cash settlement was not due for five weeks until May the 2nd.  In CloudTag days, Tom would ask awkward questions about premium placings but that was before he fell in love with Obtala. 

Come 2nd May the money had not arrived; Obtala announced that the placing was still going ahead albeit with a different Hong Kong company and with a different settlement date of on or around 5 July 2017”.  But at the beginning of July, the last update on this topic was that only 5% of the money had been received and the balance would be received in four to six weeks.

So here we are, almost six weeks later, and there has been no RNS from Obtala; I would hope that even Tom might agree that it’s reasonable at this point in time to ask: WTF is going on?   Why was the structure so complicated to begin with?  Was the whole thing dependent upon the investor being able to forward sell a chunk of its shares at a price above 20p?  That would explain a lot, including why only 5% of the funds have been received, given that the share price has only exceeded 20p for about eleven trading days since the original announcement.

 If you were at the UK Investor Show back on 1st April (as I was, it was a great event) you would have heard Tom talk about CloudTag and describe three things that should have warned you about the company (starting at 3:35 here).  They were:

 1. It was registered in a foreign jurisdiction

2. It had complicated corporate structure - good companies are simple

3. The individuals behind the company …

 1 and 2 definitely apply to Obtala and we’ll see about 3 in time, but how many similarities with CloudTag do you think that I need to find before Tom falls out of love with Obtala?

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