Here is the REASON for the decline
yesterday, the one day I didnt check, CTC filed an amended S-3 registration statement, the one we are waiting for the SEC to approve so that we can convert the DBH if the price hits $3.34, or thereabouts. The amended S3 contained info on Ch. 11, and of course carried with it the required risk disclosures, including doomsday scenarios. We are all used to this in all filings. But, not with Ch. 11.
Well, the second section describes the bk status in no glowing terms, and includes a statement that the judge can put CTC in Ch. 7 or dismiss it, and CTC can cancel shares. This is all known and we have discussed this at length but after the filing the selling started. The filing also stated the assumed max dilution, without punitive damages if any, if all parties got their wishes against CTC would be 22 million shares dilution, which imo is not bad as a max, but I would be surprised if it got to that much given AQUs ludicrous case.
Remember, the judge has allocated for the confirmation hearing the entire day of the courts time, and said he would go into another day, so that they can get the plan confirmed. He would not have done that if he thought he had a plan that he could not confirm. Also, CTC stated in the amended S3 and publicly in court that they do not intend to cancel shares and they intend to exit Ch. 11 really soon. Also, remember that the litigants havent won anything, and if they dont get the jury trial before the confirmation hearing Judge Ryan will decide it all that day. So, I think the selling, which is still minor when you look at the numbers, is based on yesterdays filing and imo premature. The technicals are affected by this filing (as technicals are by prs) and Im not going to say all is rosy but I dont see sell signals yet. This is not insiders selling, meaning the selling did not preceed the filing, the selling FOLLOWED the filing. I would say this is a buying opportunity still.
One last thing, Suffolk Capital increased their holdings in CTC by over 300K shares in May ... and have INCREASED their holdings through June. They would not have done that, one would presume, if they felt CTC could not get out of Ch. 11. Just my analysis.
Someone also posted on RB that there are warrants due this Friday, that may also account for some of the selling, but due to the timing of the filing and selling, I would say its the filing mostly.
Bo
AI
