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Gulf Resources, Inc. Message Board

  • alan74z alan74z Dec 21, 2012 11:53 AM Flag

    new acquisition and stock dilution

    I just sent the following message to Max, just FYI, I'll let you know what the answer is.
    Hello Max,
    I have just seen the latest 8K filing, congratulations on the acquisition, I think it is a great news. Talking to other minority shareholders, we are all in agreement that while this is a great acquisition, the dilution of the stock by issuing 3.8m shares is huge making this deal a lot more expensive for the current shareholders, one way to reduce this impact while helping the shareholders would be to try to buy back those shares at a price even below the price used to compute the purchase of $1.2950 as of today the share price is at $1.18. This would not only make the deal a better deal for all shareholders. We are talking about using $5m to buy back shares at most if the price remains below $1.2950, I think the Board could agree to do so without major risks but with plenty of benefits for the shareholders. There is a fair chance this Buy Back will be limited as the price of the shares could quickly go above $1.295 but shareholders would be happy that a floor has been put on the down trend of the stock price and the Board would make the current shareholders very happy with certainly even a fraction of the $5m really spent.
    Could you please pass this feedback to the Company,
    Thank you,
    Best regards,

    Sentiment: Buy

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    • Good, Alan, except the buyback should be
      well under 50 cents per GURE share in order
      to make current shareholders VERY happy
      don't you think.

      Sentiment: Sell

    • BTW, I don't know if they will do anything and buy back some shares to reduce the dilution impact but at least they should be aware that this deal with half of the price in undervalued shares was not seen well by current shareholders and hopefully they will be more reluctant to do a similar deal again. They told me during a previous exchange of messages that the seller requested to be paid half in shares as he expects to benefit from the turnaround in the Bromine Business and therefore much higher GURE share price value. I fully understand the seller but again given the low price of the shares why not reduce the dilution impact by buying back the same amount of share on the open market if people are willing to sell them at such a low price.

      Sentiment: Buy

 
GURE
1.9443-0.0257(-1.30%)11:42 AMEDT