The underwriter only pays for any shares that are not taken up. They typically only underwite when confidence is high they believe it will be fully or close to fully subscribed. They get paid to manage the raise, shuffle shares and all that and hopefully it’s is fully subscribed and they do not have to pay for any shares. They idealy want an in and out transition. If it’s not fully subscribes then they could end up having share on their books. They can then offload these as they want. For example if you have say a $500k shortfall they pick up 6.25m shares. Hold a bit and see if SP raised by say 0.1c. If not pump it a bit deliberately and then Sell. Sell over a few weeks, months not to spook the masses and somewhere around $60k profit thanks for coming plus initial CR fees and they are happy campers while punters are left at with zip plus possible dilution factor, case by case, and so on.
That may not be anywhere near how it plays out. I have watched one instance reciently when the underwriting broker receive a shortfall and then sold down the SP for weeks afterwards offloading shares with apparently no qualms at selling at a loss. Beats me why but rest assured they made money along the line somewhere.
The power is with those with the money and it’s just how things go and small caps have little option other than to play the game and do the best they can in the hope in the end it all works positively and we all make some cash.
APC is moving nicely and advancing. The raise will be to advance further and with a completed DFS which should be very positive, they can start looking at funding. If they can peg one or more off takes, preferably binding, while DFS gets done the end result will be an advancing SP irrispecrive of the current raise impact has on the short term SP.
Keep the end goal in sight not just today’s or next months SP.
APC Price at posting:
8.1¢ Sentiment: Hold Disclosure: Held
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