Thread by @ooyeboade

Japaul has some ‘harsh’ words for the ‘negative press’ that crashed its share price

nairametrics.com/japaul-has-som…

Milost's (prospective) investees are really vexing☹️. Just in case you don't have time to read the story in the link, here is an excerpt from Japaul's statement:

"This is simply sad. Milost currently holds no shares in Japaul as yet as we are awaiting regulatory approval, I just wonder how would it then be said that it is involved in a pumping and dump scheme in Japaul shares"

The Key word here is "Pump and Dump" just as @BusinessDayNg called it. A review of Milost's MESA (Milost Equity Subscription Agreement) strategy revealed the following; (As @Nairametrics and Milost outlined it)

1 MESA is a hybrid of debt and equity

2 Milost gives a company cash in exchange for equity at a 50% premium to the market price of the stock.

3 For example, if company's stock is trading at N1, Milost will buy it for N1.50

4 If the share price drops below N1.50, the company, for example, will pay Milost the difference between the N1 and the N1.50 in more equity such that Milost value will rise back to N1.50. the company does not need to pay cash, just issue more equity.

5 The company will also pay Milost 10% – 20% discount to the 5 days Volume Weighted Average Price (VWAP) as a penalty

6 According to Milost the cash given to the company as equity can only be used as working capital while debt can only be used to acquire cash-generating assets.

7 Milost concluded by saying that "unlike other instruments that are mostly used by hedge funds, the MESA is value instrument that is designed to only exit investments after 7 to 9 years from the time of investment"

From MESA's modalities, I can deduce that it is LITERALLY a pump and dump instrument.

Items 2 and 3 in this thread depicts the "PUMP" mechanism, while

Item 7 depicts the "DUMP" mechanism.

My question therefore is why are the investee companies angry?

unroll @threadreaderapp