Lincoln Park Deal is VERY ALPP SHAREHOLDER FRIENDLY
There's been some confusion on the LPC deal lately. My posts today will clarify that confusion.
What is the LPC deal?
It's an arrangement where ALPP has the OPTION to sell shares to LPC in exchange for cash.
The first and extremely important word to understand in that sentence is OPTION.
The LPC deal is a source of cash that ALPP has the option of tapping.
OPTION
OPTION
OPTION
Did you catch it? OPTION.
There has been some confusion that the "mere existence" of the LPC deal forces something to happen.
That is 100% WRONG.
This quote is directly from the 8K:
"Under the terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park"
Read again: has the right, but not the obligation
ALPP can choose to tap the financing. ALPP can also choose to do nothing.
And the key as you will see in my future posts today is that, because it's an option (not an obligation), ALPP can CHERRY PICK the most opportune times to tap the financing.
That means ALPP can choose the BEST times to tap the financing, i.e. the times that are most beneficial to ALPP and ALPP shareholders.
And what times are those?
Well, when the stock price is highest. When the pps spikes to new highs.
And when you think about that, that's actually the WORST time for LPC.
Because LPC was forced to buy at the High of the Day. Or the High of the Week. Or the High of the Month. Whatever the case may be.
Now you may be asking, why would LPC accept being forced to buy at the highs???
The answer is: Because it's written into the contract that LPC HAS TO BUY, when ALPP tells them to buy.
That's right. The obligation is on LPC.
They MUST buy when ALPP tells them to buy.
Here is another quote directly from the 8K:
"and Lincoln Park is obligated to purchase up to in the aggregate $10.0 million worth of shares of the Company’s Common Stock."
See the word OBLIGATED. LPC is obligated to buy when ALPP says to buy (even at the highs).
For ALPP, the LPC is an OPTION.
For LPC, the LPC deal is an OBLIGATION.
That's the first critical thing to understand and the first reason why the LPC deal is HIGHLY FAVORABLE TO ALPP AND ALPP SHAREHOLDERS
ALPP is in COMPLETE CONTROL of the LPC deal. The "mere existence" of the arrangement does not force anything to happen. ALPP decides if/when anything happens. LPC does what ALPP says.
There are even more reasons why the LPC deal is highly favorable to ALPP which I will put up in future posts today.
