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Signature Group Holdings, Inc. Message Board

  • guster0 guster0 Jun 6, 2013 3:28 PM Flag

    waiting for dilution. Should know more in a week or 2

    Under terms of the settlement of the proxy battle, the new recommended slate of directors will be Bouchard, Raj Maheshwari, Peter Bynoe, Patrick E. Lamb and Phil Tinkler. Maheshwari also was part of the dissident group. A revised proxy statement is expected by the end of the week.

    The settlement agreement now supports the previous management’s proposal to raise money by selling new stock.

    “We believe our investors have an appetite to invest more capital into Signature, and our goal with Craig is to find and execute those opportunities," Tinkler said in a statement.

    Following today’s announcement, shares closed up 4 cents, or 6.5 percent, to 76 cents on the OTC Markets.

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    • Your waiting is a huge gamble that isn't likely to bear fruit. There is good dilution and there is bad dilution. Bad dilution is when the CEO gives himself and his cronies millions and millions of options and stock grants with ratchet down clauses on top of huge salaries all unconnected to performance and when they make unbelievably bad purchases like the make-up company and/or non-material purchases like the breaker company--like what we already experienced with the departing CEO and VP

      Good dilution is when they issues a bunch of new shares to make a major acquisition/merger with an existing profit cow. Yes, they could do it with existing shares. Yes, they could even do a reverse split and do it with 100 shares in the whole company if they wanted to but that's not what the market is comfortable with. The market is comfortable with several hundred million in shares being issued for a new big dog coming on board (which I expect will happen within the next year) so there is a lot of upside potential to the shares after the acquisition. That's what the market likes to see. The only time this good dilution turns bad is if the marketplace perceives the shares given to the new big dog were too many. And given that the shareholders with skin in this game now run the company including Raj, I wouldn't gamble that this company is going to give away too many shares.

      Secondly, they need to do something. It's either this or they shut it down and put it all in stocks--what would have been one fantastic ride given 20/20 hindsight had they done it 3 years ago. It's a snowball thing. If our snowball had grown to $2 a share by now, it just makes the new big dog we can buy even bigger.

      • 2 Replies to abigchocoholic
      • Chockman has this nailed. The fact is that today I think they have limited share issuance capacity once options etc are factored into play. I think 40m or 45m shares authorized and not potentially spoken for already. To do a large deal they must have the share authorization increased. Once a deal is ready it can be used and the market will eat them or not. Getting the authorization approval to issue is not the same as issuing them. That won't come until a deal warrants it. I think this is a logical first step for the "big deal" so many claim to want to utilize the NOL. Having it defeated at last annual meeting did many thing, not the least of which tangled up what could potentially be done. It virtually assured "small deals" etc and or an effective block by McIntyr s group in their "final act" before they left town at .30 cents a share apx.

      • Above all, they must get a tax opinion from their accountants and attorneys that the issuance of a large number of common shares will not endanger the NOL in any way. This is key to the Company's success. I have tried to contact the company to make them aware of this possibility (hopefully they already know this) but as yet have not gotten any response from management.
        Others are encouraged to make similar calls to the company.....it's really important.

 
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