Agree with your concerns but I think we need to look at managements form. Up until now raising have been by way of rights issues protecting existing shareholders, pay to play. The MD and chairman are both susbstantial shareholders so they are aligned with our interests.
the fact that this time they are going to the USA to raise at least some of the money raises some interesting questions.
At the moment renewable energy and stem cell are both hot sectors in the USA and noted in the release is that this will be the only listed stem cell company that is profitable in the world. Does this mean the raising can be done at a higher price? Given past form, existing shareholders interest are only protected if this raising is done at a premium.
Is there a plan to list in the US, a requirement of many US investors? If so there would be other US entities interested in MLA down the track, many of whom have deep pockets.
The comment that the capital raising is well advanced suggests they have been marketing past and forecast earnings which I assume we will see with notices for shareholder meeting.
The share price reaction suggests a deep discount is not likely but we will have to wait and see.
The company was a already effectively cash flow break even with a good growth profile. From the release, accepting they are just the MD's words, that growth profile and path to profitability is enhanced with this acquisition.
The notice of meeting should provide the answers.
IMHO DYOR etc
MLA Price at posting:
13.0¢ Sentiment: LT Buy Disclosure: Held
