Just 7days after announcing a massive equity offering, Spokane Washington based Mines Management (MGN) has cancelled the stock sale.
SPOKANE, Wash.--(BUSINESS WIRE)--MINES MANAGEMENT, INC. (NYSE Amex:MGN)(TSX:MGT -News) (“Company”) announced today that it has withdrawn its previously announced public offering of 6,000,000 shares of common stock. The terms presented by the underwriters did not meet the minimum expectation of net proceeds.
The Company’s President and Chief Executive Officer, Mr. Glenn M. Dobbs, stated, “While we were gratified with the strong support for the offering, potential pricing would have required unacceptable levels of dilution to current stockholders. We are fortunate that our balance sheet remains strong as we work to advance the Montanore Silver-Copper Project, with approximately US$14 million in cash and cash equivalents, and no material debt.
I know what was said in the release. What may not have been conveyed was:
-->>Investors IRATE at the 6million offering, amounting to 30% dilution
-->>Vomit-inducing investment banking fees
That's just me speculating, but it takes a LOT for management to embarrass itself by cancelling a huge financing just a week after announcing it. This company has a market value of $60million and sits on a not-insignificant $12million cash pile. With no debt, they could probably borrow at reasonable rates. They probably did not need to raise money in this fashion, and got an earful from investors. I applaud them for walking away from a deal that was financially unattractive - many small firms enjoy being wined-and-dined by banks, enough so that they'll happily engage in shareholder-unfriendly activities.
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