I emailed Fred Sommer a few days ago asking for an update on the JV. His response:
"until a deal is finalized we are staying the course"
All that really matters at this point is what kind of deal they can get for ESS and how much cash upfront they can get. I posted this earlier and now it's even more true. The scary part of the RS is the AS stays the same so they could continue to issue large blocks of more stock to raise more money after the RS, making the common stock holders own a smaller and smaller portion of the company.
What is interesting about this proxy is that they give a range from 2:1- 300:1. and they say they may not even do a reverse split at all.
Has anyone on this board ever seen a proxy where they state a range and they also state they may not even do a reverse split? Every time I've seen when a RS is proposed, they at least state whether nor not they are actually doing it. The vote will either be for a specific ratio, like 1:150 or the vote will give the BOD the right to determine what the ratio will be, but either way the vote is for or against a RS actually happening. Here the vote is giving the BOD the right to do a RS but they may not do one at all. In other words, the board doesn't even know yet whether or not they are going to want to do a RS. Why not? Why not just ask for an approval and do the RS right after the vote? I also have never seen a range stated in a proxy- maybe someone else has. I'm sure if it has been done, it' s never done with such a huge range as this.
Think about that- the company says it may be necessary to do a 1:300 RS, but may not do a RS at all- are you kidding me?- it doesn't make any sense.
Which is why I believe they are doing this as a back-up plan if they are unable to finish a deal for ESS in time before they need more money. But hopefully if they get enough cash they either cancel the RS or maybe do a small one next year. Fred said a couple months ago the RS was no longer being considered. Remember they also said they were doing a RS in June and never did. I am guessing the negotiations have either stalled or just taking longer than they thought. This may also be away of negotiating with the partner at the table to show that they are willing to walk and continue to dilute the SH instead of taking the deal offered. Hopefully we'll get some news soon.
"until a deal is finalized we are staying the course"
All that really matters at this point is what kind of deal they can get for ESS and how much cash upfront they can get. I posted this earlier and now it's even more true. The scary part of the RS is the AS stays the same so they could continue to issue large blocks of more stock to raise more money after the RS, making the common stock holders own a smaller and smaller portion of the company.
What is interesting about this proxy is that they give a range from 2:1- 300:1. and they say they may not even do a reverse split at all.
Has anyone on this board ever seen a proxy where they state a range and they also state they may not even do a reverse split? Every time I've seen when a RS is proposed, they at least state whether nor not they are actually doing it. The vote will either be for a specific ratio, like 1:150 or the vote will give the BOD the right to determine what the ratio will be, but either way the vote is for or against a RS actually happening. Here the vote is giving the BOD the right to do a RS but they may not do one at all. In other words, the board doesn't even know yet whether or not they are going to want to do a RS. Why not? Why not just ask for an approval and do the RS right after the vote? I also have never seen a range stated in a proxy- maybe someone else has. I'm sure if it has been done, it' s never done with such a huge range as this.
Think about that- the company says it may be necessary to do a 1:300 RS, but may not do a RS at all- are you kidding me?- it doesn't make any sense.
Which is why I believe they are doing this as a back-up plan if they are unable to finish a deal for ESS in time before they need more money. But hopefully if they get enough cash they either cancel the RS or maybe do a small one next year. Fred said a couple months ago the RS was no longer being considered. Remember they also said they were doing a RS in June and never did. I am guessing the negotiations have either stalled or just taking longer than they thought. This may also be away of negotiating with the partner at the table to show that they are willing to walk and continue to dilute the SH instead of taking the deal offered. Hopefully we'll get some news soon.
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