GEONG (AIM:GNG) – another unexpected announcement gives the share price a boost but doubts rema
The China based provider of software solutions issued a somewhat confusing update on both trading and a proposed acquisition. Despite the evident growth prospects we have had our doubts about the long term viability of this business for sometime, with cash generation our biggest concern. Today’s update serves up more mixed messages.
Geong announced back in July that it had entered into an agreement to acquire Hong Kong based company Adbeyond for up to £9.6m, to be satisfied very specifically 50% in shares and 50% in cash. At the same time it also announced that it entered into a ‘non-binding term sheet’ with one of its major Chinese customers to raise a further US$8m by way of an issuance of a two-year 7.5% convertible secured loan stock. Despite all indications that its customers were reluctant payers in the normal course of business, the suggestion was that a large customer was happy to…