Another letter to the FSA, I think...

Chandratillake has been at it again.

In the documents that accompanied the recent placing, it was stated "Despite being fully funded, the placing will provide capital to allow blinkx to seize growth opportunities that will arise as the economy recovers".

And yet a recent Business Week news item dated 3rd November states:

"Blinkx Plc will raise £5 million through a share placing. The company plans to use the proceeds for acquisitions. Chief Executive of the company, Suranga Chandratillake told Dow Jones Newswires: "We think there's going to be a number of interesting opportunities that arise as some companies haven't done as well as us during the downturn." He stated that the company would consider strategic partnerships, acquisitions and new distribution networks. He added: "We've not got a time frame for any deals but the downturn tends to sort the wheat from the chaff and the chaff is definitely all around us."

So Chandratillake states that the £5m placing (approximately a 10% dilution for existing shareholders) is for acquisitions, whilst official documents states more vaguely that it is for 'growth opportunities' (which could of course include acquisitions, but could include many other things also).

If the placing funds were really for acquisitions, why not say so in the official RNS for the placing?

I'll tell you why - because if the official documents stated that the placing funds were for acquisitions, and then it turns out that the money had been used for day-to-day company running costs (what with them now having 6 offices and well over 100 staff and all), the company would be guilty of issuing a false prospectus. As it is, Chandratillake can shoot his mouth off to the press, he can give the impression the money is for acquisitions, but such loose talk is not he thinks, legally binding.

I think he's wrong. Once again, I believe he has made a representation that the company is about to grow through acquisition (there has been no sign of any such acquisition yet - but then of course this is Blinkx we're dealing with here, and they never tell their shareholders jackshit anyway). Should such an acquisition not happen, I believe he will be guilty of a misrepresentation. Why - as CEO of a listed company - say something unless you want people to think it is the truth and act as such?

If there has been no acquisition announced by end of Feb 2010, I will be writing to the FSA once more to point this out to them (with Blinkx's burn rate they will have got through at least £5m by then).

I like Chandratillake's black humour when he says: "some companies haven't done as well as us during the downturn". Has the guy looked at his own share price lately? It's a third of the IPO price!

Christ, I hate to think what it would be if Blinkx hadn't been doing well...

Oh, and I'll tell you what else sorts the wheat from the chaff of company management - delivery, communication, and giving a fuck about your shareholders...