RE: Zen's (and others') thoughts about the UCAD PR...
I agree that at first blush, this PR was exciting. However, it is dramatically less so now that I have digested it. In an effort to clear up some misunderstandings some people seem to have about UCAD's PR, here are some thoughts. Hope they help:
1) UCAD is merely doing a share exchange with the LIC. In other words, the LIC is NOT giving UCAD $9M. They are merely swapping shares worth $9M. Therefore, if UCAD was valued at $5/share for this transaction, then they are giving up 1,801,071 shares in return for about 5M shares of LIC (where 1 British pound = $1.80). Nothing more, nothing less.
2) While the shares UCAD is swapping are restricted, up to 50% of the LIC's shares will be immediately tradable by UCAD, so UCAD could get some cash from this after the LIC goes public. However, depending on the LIC's OS, if UCAD tried to sell the 2.5M shares it will be eligible to sell when the LIC goes public, LIC's share price could tank. For example, if the LIC's OS is only 10M, then UCAD trying to dump 25% of the OS would kill the stock price, and therefore lower the cash it would generate by selling the shares. On the other hand, if the LIC's OS is 100M, then there is a more realistic chance UCAD could dump the 2.5M shares (only 2.5% of the OS) and not lower the LIC's PPS dramatically. However, until the LIC's OS is declared, then we will not know how easily UCAD could dump its shares to generate cash.
3) UCAD's shares are NOT going to be traded on the London Exhchange; the LIC's shares are going to be traded on the London Exchange.
4) While the basis for the LIC's share number determination was 1 British pound per share, no one knows at this point what the IPO PPS will be, nor how the market will react to it. Therefore, if the shares sell for less than the equivalent of $1.80/share, then UCAD loses.
5) It is not yet clear whether UCAD is issuing new shares to the LIC or taking them from their current OS. If they are issuing new shares, this further dilutes not only CMKX's ownership in UCAD, but it also will dilute the value of our dividend.
6) Finally, how this UCAD transaction will or will not benefit us at CMKX shareholders is COMPLETE, TOTAL, UTTER SPECULATION at this point, and should be treated as such. In fact, I hesitate to even suggest it is "one more piece of the puzzle" in place, because the "puzzle" is becoming more puzzling with each piece! In any event, anyone who even tries to venture a guess as to what this might or might not mean to CMKX shareholders is wasting valuable time they could be spending otherwise.
FWIW. And, as always, only my interpretations and opinions. Peace.
