The stock price of Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) reflects that the excitement around the company’s new credit arrangement failed to deliver long-term excitement to its investors. The stock of the e-cig maker nosedived sharply, retreating from its previous day’s gains. The company’s most recent press note informed the shareholders that it has risen more than $41 million funds through non-dilutive senior secured term loans.
What is wrong?
The reason behind the investors’ disappointment with the company is its actions over the past few months. Firstly, it is an unarguable fact that Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) in undergoing a difficult phase of time. Secondly, the company has failed in its endeavor to uplist to a reputed national stock exchange. Following the failure, the company had massively issued discounted shares in a bid to convert its debt. But, its calculations misfired as such issuance pushed dilution out of the boundary.
Are corrective actions working?
Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) again took corrective action and announced a 15-for-1 reverse stock split that reduced the number of outstanding shares from 20 million. However, the company’s constant dilutive activities as again amassed 55.4 million outstanding shares, which is a negative factor to dissuade even a little aware investor.
The company’s recent financing arrangement though aims to reassure the investors that the chain of dilution has been stopped, but it has not restored the confidence yet. Again, the company’s warrants that give the right to the holder to exercise the same at a price of $0.45 may further aggravate the problem of dilution. Moreover, the company’s financial standing too is not in its favor.
With mere $2 million cash and $18.6 million in total current assets, Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) oversee a total current liability of $164.7 million. This explains why investors are upset with the company. The stock of Electronic Cigarettes Intl Group Ltd (OTCMKTS:ECIG) plunged by nearly 15% to $0.440 as 2.61 million shares traded hands.