Sanctuary stock at .05...Big Deal?

Short:

short term financial investor: If you are interested in squeezing out a company (and then sell the rest): make sure cash flow covers intererest; enough to keep the company alive; from that perspective you are correct. And I am pretty sure that you can earn lots of money with companys close to financial collapse. This is not my area though I work with sound financial data.

strategic investment: long term interest; restructure and organize a company which is creating cost, so investors have to take care of old debt or even give additional funds, so a company gains trust again and gets access to cheaper capital on its own.

debt is cheaper than equity: That is not correct in general. It depends on the mixture(leverage). Cost is one side: return on total capital is the other side. If you want I can give you an example. Sanctuarys return on total capital is NEGATIVE, since they made a loss. This is a problem.

assets= equity + liabilities --> assets in Sanctuarys Case: assets < liabilities meaning equity is negative!!!! A company whose assets are covered only by liabilities is worth less then nothing in the books (THAT IS THE REASON WHY SANCTUARY IS AT 5 PENCE, which is pretty damn close to nothing) if you do not consider other things which we will do here:

Enterprise Value=Company's market capitalization - cash and cash equivalents + preferred stock + debt; not very reliable since it only reflects current positions.

personally I would rather trust DCF using FTE because it gives an outlook and you can calculate better.

Buying a company on the stock market: You might not be able to buy everything on the spot at 5pence that is correct. You could slow down the buying process and negotiate directly with large chunk holders though, which could give you a fair chance to get in a comfortable position at a price close to 5pence. Example: Porsche was able to buy 20% of VW and nobody noticed till they anounced near completion.

If you like to eleborate this topic further I suggest we do this in private because the board ist most likely bored and not interested.