Originally posted by J.W.Pepper
don't get your argument that because they hold debt they need to cap. raise? sure if the debt gets called in or if they only had $1 mill. in the bank then that's a different story but none of those situations has occurred.
As I stated they have plenty of coin to cover any interest payments, etc. "leaves them with around $16mill. in the bank at the start of 2019"
The debt they have is tiny compared to most ASX stocks, easily manageable, infact most juniors on the ASX have much bigger debt with no means of repaying it yet they function fine.
Sorry Dr Pepper but you seem to completely miss my point about the balance sheet.
I had thought I had made it pretty plain and easy to understand.
I will try again.
The company has net debt is somewhere around $2-4 million at present.
Every day that passes, the cost of keeping the doors open and paying the CEO and others drags the company further into debt.
The company is NOT just running down a positive cash balance.
I think you may be under the impression that they have $16-18m in cash and $2-4m in debt - which is incorrect.
The company has debt of $20m and cash of $16-18m - ie net debt of $2-4m - but for today, lets just call it $3m.
The company is racking up more debt every day.
If net debt is say $3m today and the company spends $3m a quarter to keep the doors open, then in three months, the net debt rises to $6m and in six months it rises to $9m and in a year its up to $15m.
Unless they are anticipating a mighty big refund cheque from the Australian Government (R&D rebate?), or the get a milestone payment out of Merck or they sell oncology assets for more than the market seems to think, then the urgency to replenish the cash is very real.
My argument falls over if there is a windfall of some kind to get them out of debt.
If that does not happen, investors will become increasingly unwilling to trust the company and the share price will suffer as these players exit.
It is just an opinion and I hope you understand the picture I have drawn.
Take a look at the balance sheet and the cashflow statements if you don't believe me.
