Seems to me that GNBT just shouldn't issue the dividend right now. The due bills remain with the shares being traded; I don’t think there is an expiration date associated with them. Once NGIO is spun off, and maybe a couple of other good news stories are released, hopefully we get a market cap in the couple of hundred million range. With only 43 million shares outstanding, that is still close to $5 per share which more than qualifies us for uplisting. Once that is accomplished, issue the dividend to those that have the due bills.
I tend to agree that CMF’s bad behavior doesn’t necessarily entitle others who signed the waiver to the dividend, but the attorneys will have to decide. I don’t think the other folks will sell their shares at $.80 - many of those shares came from deals where they were applied as currency at $2.50 a share. Why would the holders suddenly decided to take $.80/share for the controlling interest in their former stand alone companies, particularly with the potential pps gains if GNBT executes its plan?
I think Joe has some leverage with CMF at this point. He can obviously threaten a very public lawsuit that makes it very clear that CMF went back on their agreement, destroying their future credibility. He can also publicly leverage a SEC investigation into the improper filing of documents, as well as the breach of the agreement. Both of those actions will take time, but the PUBLIC release of the lawsuit and SEC investigation will be immediate, and should have a chilling effect on future CMF clients. And remember, the truth is an absolute defense against slander or libel, so if Joe is sure they broke the agreement, there is no counter-suit that has merit.
I suggest using that leverage with CMF as a counter to this deal:
1. They will buy back 2 million shares on the open market, starting on a specific date and finishing the purchase no more than 10 business days beyond the starting date. They can use any strategy to purchase the shares (evenly over the 10 days, wait and purchase all 2 million the last day, whatever), but at no time from now until when the purchase is completed are they allowed to sell or short any shares of GNBT, so the price of the shares cannot be manipulated by them. Keep the agreement and dates private between CMF and GNBT so nobody else can manipulate the purchases or the price of the shares.
2. All of the 2 million shares purchased and all other shares held by CFM will be restricted from sale for 3 years. Interestingly, if all goes as planned for GNBT, those shares will be worth much more than what they bought them at. The 2 million shares purchased will not be eligible for the dividend, whenever it is issued even if due bills are attached. Any dividend shares will either go back to GNBT or will have some other disposition that does not benefit CMF beyond owning the 2 million shares.
3. CFM must make a public statement that they breached the agreement with GNBT, and that they are making it right for GNBT and shareholders through a private agreement that will be fulfilled by a date certain. Details can and will be released once the agreement has been fulfilled. They can spin this anyway they want (rogue trader, oversight failure, whatever), but it should be made clear that it was CMF that screwed up, not GNBT. GNBT will make a statement that a private agreement has been reached that allows CMF to resolve an error, and again, details will be released after it has been fulfilled. The purchase of the 2 million shares will have to be filed with the SEC after they have been completed anyway.
4. Any dividend shares that they owe to purchasers of the original CFM shares will be paid out of the 2 million shares they currently hold. GNBT will be solely responsible for establishing when that dividend is paid.
The one wild card is whether the other restricted holders will toe the line or whether they will demand the divi shares. Again, I’m not so worried about them selling into the market, because that doesn’t benefit them regarding the sales prices for their companies. But as Joe has said, adding an additional 20 to 25 million shares to the outstanding count because of one bad apple hurts GNBT and its shareholders. I just hope the restricted holders understand this, and since they too are shareholders, will not demand the ability to receive the divi.
Probably there are three or four main issues here that might or might not meet regulatory oversight. That is what attorneys are for - work out the details where CMF can save themselves a lawsuit and save some face, while GNBT and shareholders receive a quick restitution for an illegal act. If that deal can be done quickly (say first quarter, 2020), and the other positives happen, CMF can make some money, GNBT can be made whole and shareholders will see an increasing pps.
I tend to agree that CMF’s bad behavior doesn’t necessarily entitle others who signed the waiver to the dividend, but the attorneys will have to decide. I don’t think the other folks will sell their shares at $.80 - many of those shares came from deals where they were applied as currency at $2.50 a share. Why would the holders suddenly decided to take $.80/share for the controlling interest in their former stand alone companies, particularly with the potential pps gains if GNBT executes its plan?
I think Joe has some leverage with CMF at this point. He can obviously threaten a very public lawsuit that makes it very clear that CMF went back on their agreement, destroying their future credibility. He can also publicly leverage a SEC investigation into the improper filing of documents, as well as the breach of the agreement. Both of those actions will take time, but the PUBLIC release of the lawsuit and SEC investigation will be immediate, and should have a chilling effect on future CMF clients. And remember, the truth is an absolute defense against slander or libel, so if Joe is sure they broke the agreement, there is no counter-suit that has merit.
I suggest using that leverage with CMF as a counter to this deal:
1. They will buy back 2 million shares on the open market, starting on a specific date and finishing the purchase no more than 10 business days beyond the starting date. They can use any strategy to purchase the shares (evenly over the 10 days, wait and purchase all 2 million the last day, whatever), but at no time from now until when the purchase is completed are they allowed to sell or short any shares of GNBT, so the price of the shares cannot be manipulated by them. Keep the agreement and dates private between CMF and GNBT so nobody else can manipulate the purchases or the price of the shares.
2. All of the 2 million shares purchased and all other shares held by CFM will be restricted from sale for 3 years. Interestingly, if all goes as planned for GNBT, those shares will be worth much more than what they bought them at. The 2 million shares purchased will not be eligible for the dividend, whenever it is issued even if due bills are attached. Any dividend shares will either go back to GNBT or will have some other disposition that does not benefit CMF beyond owning the 2 million shares.
3. CFM must make a public statement that they breached the agreement with GNBT, and that they are making it right for GNBT and shareholders through a private agreement that will be fulfilled by a date certain. Details can and will be released once the agreement has been fulfilled. They can spin this anyway they want (rogue trader, oversight failure, whatever), but it should be made clear that it was CMF that screwed up, not GNBT. GNBT will make a statement that a private agreement has been reached that allows CMF to resolve an error, and again, details will be released after it has been fulfilled. The purchase of the 2 million shares will have to be filed with the SEC after they have been completed anyway.
4. Any dividend shares that they owe to purchasers of the original CFM shares will be paid out of the 2 million shares they currently hold. GNBT will be solely responsible for establishing when that dividend is paid.
The one wild card is whether the other restricted holders will toe the line or whether they will demand the divi shares. Again, I’m not so worried about them selling into the market, because that doesn’t benefit them regarding the sales prices for their companies. But as Joe has said, adding an additional 20 to 25 million shares to the outstanding count because of one bad apple hurts GNBT and its shareholders. I just hope the restricted holders understand this, and since they too are shareholders, will not demand the ability to receive the divi.
Probably there are three or four main issues here that might or might not meet regulatory oversight. That is what attorneys are for - work out the details where CMF can save themselves a lawsuit and save some face, while GNBT and shareholders receive a quick restitution for an illegal act. If that deal can be done quickly (say first quarter, 2020), and the other positives happen, CMF can make some money, GNBT can be made whole and shareholders will see an increasing pps.
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