Let's give it a rest already. The truth is, management didn't dilute anything. You can't dilute something if you add more value to it at the same time.
1000 shares @ 1.00 = $1,000
Management decides to issue another 1000 shares @ 1.00. Now there's 2,000 shares, but the company is worth $2,000.
The real reason why everyone is angry is because the banks got a heads up on this and shorted the hell out of this stock, plunged it down. Another mistake by management, but not really their fault. There's nothing illegal here.
What I don't get is, everyone says management should have done something else - WHAT??? How could management have possibly raised $400m+ dollars without us being where we are now ($4.20 a share). If management had sold off more gold shares and lost majority ownership, we may be worse off than we are now. And selling futures obviously was not an option, since my guess is, the future sales would get far less than they expect to get on the market. Had they sold tons of moly futures, and moly prices went up, everyone would be calling for heads. And finally, assuming more debt (e.g., lines of credit) was probably not an option given the cost of the money would be far more than 6%. And that would have sent the stocks down even further.
This is a huge over-reaction.
I have posted too that I think someo other mining company (And there are some huge, cash rich ones) would have bought TC. But I suspect mgmnt wanted to keep their paychecks. thus putting the screws to shareholders. current ones anyway.
Betchs (guess I have with my shares here!) a Chinese or Indian investment company would have been very interested.
What would make me really angry is if we find out that someone came shopping for them and they used this disastrous financing as a poison pill defense.
The levels of the financing don't make sense. 12.5% AFTER they put in an equity cushion of 200MM??? Makes no sense at all. . It seems like it was done in a rush or under some form of duress.
I have been saying for weeks these guys had a funding gap. Many on this board pooh poohed the idea. If I can see it(I can read financials but am not "an expert" hhow long has management known and chosen NOT to disclose. SHAME ON THEM
My hope (goal) is that when all the facts come out about what they knew and when and what they disclosed and when they will be found in clear violation of various securities law including sarbox and that they will go to jail.
\\The real reason why everyone is angry is because the banks got a heads up on this and shorted the hell out of this stock, plunged it down. Another mistake by management, but not really their fault. There's nothing illegal here.\\
Correct me if I'm wrong, but insider trading is still illegal isn't it? If the banks/hedge funds shorted the hell out of the stock knowing the company was planning to offer this financing deal AND that they would be able first in line to get in on the deal, THAT'S ILLEGAL! And, if company officers have knowledge that the financing agencies were doing this (or if they even suspect that they did this) then they have a responsibility to report them to the SEC. Now, whether the SEC does anything about it or not is another question (?!)
We USED TO BE a nation of laws. But, it appears this country has devolved into one where if you have the right connections, you know the right regulator, with a wink and a nod you can do anything you want as long as noone screams too loudly about it. Call me naive if you like, but this environment where banksters and hedge funds pull these kinds of stunts and line their pockets at the little guy's expense -- it needs to stop.
IMHO the important issue is what a company does with that so-called $2000 in equity.
you do NOT sell equity when it is selling under book value; you buy it back in.
Im not a big fan of Warren Buffett but he sold lots of Kraft when they diluted their shareholders to buy Cadbury.
Jamie Dimon who I am a fan of, said he will no longer buy in shares of JPM when the market prices it above book value.
Pretty obvious to me that the opposite must be true.
TC should have been sold, the project delayed or that mountain of gold itself sold off. the share dilution was the only way manglement could hold onto their fat pay checks.
You got some number wrong.
1000 shares @ 1.00 = $1,000
Management decides to issue another 1000 shares @ .50. Now there's 2,000 shares, but the company is worth $1,500.
But I agree the company is still undervalued here. I would much rather they sold more gold.
If they were remotely close to ethical they would have put the company up for sale and gotten some reasonable price for share holders. Took me way to long to realize that they could not give the remotest crap about the shareholders and are just in it for their own deal. Flat out corrupt. They lied repeatedly about material facts of the financial health of the company. My bad for being so gullible that it was an 'honest' mistake. This last episode sealed the deal on that. Looking fwd to my day in court.
The reason they didn't do any more gold stream which would have been completely non dilutive is probably because rgld told them no thanks and the 'great appetite for these kinds of deals' as Kevin put it on the december call only applies to companies and management that you could trust.
Think about it. Either RGLD passed on the opportunity for another 15% of the gold at an implied rate of 9%, when central banks are willing to loan gold at .5% per annum (nice arb huh?), or management just chose give away maybe 33% of the shares outstanding at between 3.90 and 4.60 when the hard book value of the shares is/was between 10-11$.
Which one makes kevin, pam and co look worse?
This is the best post of the day. WOW--you hit it on the head. add to it the banks who shorted the SH#T out of it to get the deal pricing and we have a complete picture. Believe it or not I bought a few today. Maybe we see a bounce, maybe not.
Management should be ashamed. 12.5% in a zero interest rate environment. The equity was issued simply to protect the fat coupon---they likely won't need anywhere near that amount to finish the build-out. Where is a good activist hedge fund when you need one?? This could make a case study in unethical mismanagement that borders on criminal. CMON boys, you are not in Vancouver.