So here we have a company offering its creditors R30m worth of worthless shares in exchange for the debt owed. The question i have, is which creditors are we talking about. if it is trade creditors, such as IBM or Microsoft, then shareholders are dead in the water, IMO. Those guys can just get the company to liquidate, an cede all the annuity revenue contracts over to themselves, and walk away with 50c to the rand or so. Especially when there is R39m in cash, and another R18m odd in fixed sellable assets. Curious as to how this will pan out
This stock is so diluted already, that further dilution is like ordering water on the rocks. And now i see they are talking about needing to raise R80m. Yet management are still prepared to pump R30m into this! Either he is reinforcing failure, or there might possibly be a silver lining out there. But I still think the most likely scenario is for creditors to force them to liquidate, in which case the lowly shareholders out there get zip!
There is no equity left, really. So the cost of liquidation will have to be carried by the applicant. In cases like this, nobody wants to bring the application for liquidtion. The creditors might as well take the worthless stock and hope for the best. At any rate, at least it is more tradable than the FARITEC debt on their books.
And the vultures set in! former management ripping out profitable contracts, selling off profitable assets to 3rd parties, creditors rejecting their scheme - wow. Look what shareholders are going to be left with - an empty shell to be split 1,5bn ways. A spectacular collapse!