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KZA 48.0¢

timing of a cash issue

  1. stolwyk

    22,691 Posts.

    I did mention that I don't like cash issues for a number of reasons, the main one concerns time and its ramifications.

    Cash issues require a sufficient spread between the price set and the original price and the confidence that the latter price won't fall too low as this would necessitate resetting the wanted price.

    As to VCR, this spread of 36 cents is the barest minimum; 50 cents will look a lot safer.

    VCR could do one of 3 things:

    Wait till the price moves up within a short time.

    Defer the cash issue till later.

    Reset the wanted price. That course is a tricky one as it affects confidence.

    Having the cash issue soon means that VCR can demonstrate to any take-over merchant that it has the cash to last for about 3.5 years (without having to make a profit) and is therefore in a strong position.

    The same goes if it takes a partner.

    See what happens.

    Gerry

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