It's a worry when trading in a company's shares remains suspended for months.
Wide Open Agriculture (ASX code WOA) has been halted since April.
It all started when CEO Jay Albany released an update on the company, including that it was "in advanced, confidential negotiations with a strategic partner with the facilities to potentially produce commercial quantities of WOA's lupin-based Buntine Protein".
The shares doubled in price on the news but were promptly suspended the next day pending "clarification" of the announcement. The clarification came last week.
The "confidential negotiations" have resulted in a non-binding memorandum of understanding with Saputo Dairy Australia. No commercial production will occur under the MOU - it is merely a legal framework for negotiating a binding agreement. Moreover, the final agreement will involve fees (yet to be determined) and WOA will have to buy and install the equipment and design the overall process, and the cost of doing this is still to be worked out. That hardly justifies the share price doubling overnight.
There's more - WOA has agreed to buy German lupin protein producer, Prolupin GmbH, which gives WOA "immediate, commercial-scale manufacturing capabilities to bring its Buntine Protein to market". Prolupin's facility has to be modified but it then should be able to produce 1000 tonnes of WOA's protein a year.
WOA shares remain suspended until the company releases the details of a share placement and share purchase plan to raise $2.5 million to buy Prolupin.
The Punter suspects the offer price of the shares will be substantially less than the 33c at which WOA were suspended in April.
Meanwhile, the Punter has accepted an offer by CO2 Australia to buy back his shares for $0.0007 each - a net profit of $52.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
