Replies to post #57110 on Genta, Inc (fka GNTAQ)

[fmrick]

Oops! I almost forgot, Bancruptcy would allow Genta to leave shareholders with NOTHING, while the noteholders (Ray among them) could take control of the whole company and own it 100 percent.

Which is what I said would happen all along. Waaay back I said that in the end this could totally fail, the note holders would take control, and end up owning the company.

But there is a problem with that. They are still a few years away from the NDA. So they will need money. The note holders will own a compound that is pretty much worthless. So Ray & Co. will see the money flow cut off. These people are used to living a good life, so I can't see them settling for nothing.

Then there are the law suits, which are coming without a miracle. And maybe criminal prosecutions. The move to California was a mistake. They are not as lenient as most other states. They are into protecting the consumer. They will regret the day they did made this move.

The only chance I see is if they structure this right. If it were me here is what I would do:

1. Do a 1:25,000 reverse split.

2. Give a stock dividend to all existing shareholders of 5 warrants for each post split shares owned. Set the warrant strike price at 25-50% above the post split price. Make them convertible for a three year window starting in six months. If the price goes up, it gives the company money. If the stock starts out at $15, and with a strike price on a warrant at $18.75 (25%) you get the price above $18.76 and people will start to send you money. This rewards the current holders some and gives then a reason to hold the stock and not sell into every rally.

3. Set the debt conversion price at a reasonable level. The level I mentioned yesterday was a worst case at 2/3rds the post split price. They could do even better, say at a 20 or 25% discount. They can do it, they control most of the finance deal anyway. Plus, the finance people would also be getting the same warrants in #2 above. At 20-25% discount to the post split price they still make money. If the price goes up (now there is a novel idea) they make even more.

4. Issue a press release explaining that this is a chance for them to get it right. Explain that the fiance people have agreed to take a hit on the conversion price for the good of the company. That would look good. And they get a chance to tell their story. With the price up in the teens post split, a very low float, and the appearance that they are trying to get it right, they would attract new investors.

5. When they start shopping for a new deal, consider not allowing the insiders to participate. This just looks bad.

They have one more chance to get this right and stay out of the courts for the next 20 years. But even more, they might actually look like they are trying to work this out instead of raping the shareholders further. That might go a long way in some prosecutor's decision to go after them, in in a jury's decision on how long they spend in jail.

If the drug works, they will still make plenty of money. They need to learn one thing that someone forgot to tell them years ago- Making money is fine, but you don't have to make it all. Let others share and they will reward you with support.