Arcan Resources Ltd ARNBF

RE:re: should get it done

[skeksis]

The stipulation that the stock has to be at 125% of the conversion price only applies to early redemptions as I read the debenture prospectus, not to payment at maturity. They aready have the option to pay the interest in shares if they want.  As I read it, when the debs mature in 2016, Arcan has the option to pay the principal in shares at 95% of market value, regardless of the current market price of the common shares. 

So why would they violate the terms of the debenture prospectus and do a forced redemption? They could wait two more years and pay everything in shares anyway.  I see no conceivable reason to massively dilute the common holders when the stock valued at 1/10 NAV and trading at a historical low.  Presumably if the drilling/waterflood program is successful, then the stock will not still be at its historical low in 2016.  If you expect drilling/waterflood to fail, you shouldn't be in either the common or the debs. 

I think it's much more likely that they agree to be acquired than screw the common holders over with a huge and unnecessary dilution event.