In an apparent bid to streamline the news events and developments leading into the vote for a reverse split of the GNBT stock, Generex has the printing press working overtime this week.
On the heels of announcing a licensing deal with Amarantus BioSciences for the buccal spray technology behind RapidMist, the company now announced that it will "dividend a portion of the shares it receives upon completion of a definitive licensing agreement to license its RapidMist™ buccal drug delivery technologies to Amarantus."
Sounds like a good deal for shareholders, hey?
But wait, there's a catch.
According to the press release issued on Wednesday, "Management of Generex intends to dividend a portion of the Amarantus shares to its stockholders should Generex receive shareholder approval of a reverse stock split proposal and thereafter complete the reverse stock split. The reverse stock split proposal will be considered at the Generex annual meeting of its stockholders to be held on June 8, 2011."
Key takeaway from the above statement: the dividend will go through ONLY "should Generex receive shareholder approval of a reverse stock split proposal and thereafter complete the reverse stock split."
In other words, you get your dividend if you vote "Yes" for the pending vote on the reverse split.
It's because of tactics such as this one that I've decided to stand on the sidelines for the vote.
The company created a fair amount of hype surrounding the last reverse split vote as well, and that one also got kicked back by shareholders. It's still yet to be seen how shareholders will take to this most current attempt.
I think it's a weak display of management when shareholders are thrown "bones" or incentives to vote a certain way on a shareholder vote. These tactics are, at the least, strong-arming, and at most, outright bribes to spur investors to vote the way that management wants.
The company should have enough of a compelling argument in its pipeline for shareholders to see the light, but unfortunately investors were kept in the dark for too long about the status of Oral-lyn, and although Antigen Express will be spun-off (if the RS goes through), shareholders still don't know who placed that mysterious $300 million valuation on AE-37.
These are questions that fancy presentations at the Nasdaq can't hide.
Additionally, the company has announced nothing about the lawsuit filed against TheStreet.com and its biotech blogger for less-than-unbias blogging about Generex over a year ago. Not that the suit means much in the grande scheme of things, but it's another example of how updates are hard to come by from management.
That said, when it comes to be 'reverse split vote time', the printing presses are wet with ink on a near-daily basis to try and convince shareholders to vote management's way.
It's my opinion that the company is losing credibility with these tactics, and that's not doing anyone who wants a 'Yes' vote any favors.
Also take note of the following statement from the PR:
"The specific portion of the Amarantus stock shares to be subject of the dividend has not yet been determined by the Board of Directors, and will be subject to Delaware rules relating to impairment of capital, which may limit the number of Amarantus shares Generex may dividend to its shareholders. In addition, Generex can make no prediction on the inherent value of the Amarantus stock and, as Amarantus has only recently become traded on the OTCBB as the result of a "reverse merger," the price of its shares may fluctuate significantly."
So shareholders don't even know what they're getting with this dividend. Regarding the Delaware rules relating to the impairment of capital, I'd have to think that some legwork as to exactly what that means for shareholders would have been done.
The fact that the statement reads, "you'll get a dividend, we just don't know how much" has this whole ordeal screaming of another last-ditch attempt at buying some shareholder votes.
With all the recent news releases, let's not lose sight of what's important.
Oral-lyn, about which the company was silent for quite a long time, and although it looks like additional trials are needed, there has been no press release to the such.
AE-37, the new "center piece" of the future for Generex, valued by an unknown entity at $300 million.
Anything not related to those two subjects, at this time and in my opinion, are just distractors.
Disclosure: No position.
