Ich stimme dem Author 100% zu.
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On The Reverse Split Vote For Genta, Inc.
Posted On 06/25/2009 12:49:04 by Roy Pope, Jr.
There can be only two answers to the reverse split decision:
Vote 'No' and the company has threatened that it "may" have to file for bankruptcy. This isn't good for any of the investors, if it happens. Worse yet, it isn't good for the drug Genasense and all the sick people who would otherwise benefit from Genasense if it is just given the opportunity to make it to market.
There are arguments in the online discussion boards that Genta, Inc. couldn't possibly go bankrupt, regardless of what they printed in the proxy folder. These arguments include assumptions that some big-name drug company would swoop in and rescue them at the last possible moment, or that some secret philanthropist will appear out of nowhere and drop a fortune on Genta's lap just to make sure that Genasense survives.
Those arguments, though they sound good, have flaws too many to even begin writing about. The greatest flaw of them all - the only ones mentioning these possible outcomes are the hopeful investors. They are holding tight to their convictions, for the sake of a dollar, and forgetting that even the mightiest of corporations can and do go bankrupt every day.
A vote of 'Yes', on the other hand, and the outstanding shares are reduced in volume while the pps is increased in inverse proportion. You lose nothing in the immediate time. However, that does then authorize the Board of Directors to issue more shares, thereby diluting the market further, and this would most certainly drive down the pps in the short term. What happens after that is up to the investors.
One of the prevailent concerns with investors at GNTA right now is that if (more like, "when") the shares are diluted by the issuance of new shares following a reverse split, the new shares will be sold at a discounted price. That is a very bad thing for investers with short-term investment goals in this company.
The upside to a reverse split is that in increasing the share value through the split, the stock becomes more attractive to investors who would not otherwise have paid any attention to GNTA as a sub-penny stock. Most institutional investors are restricted from investing in true-penny and sub-penny stocks, so this would open the doors for them to get in on the stock as well.
Another upside to a reverse split is that in bringing up the share price, the company would become better positioned to qualify moving to more respected market exchanges such as AMEX, NASDAQ and NYSE. This would act to attract even more investors to the stock - and we all know what more investors means... more opportunity to rise to the top.
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