RE: NVA.TO study case....sells and falls I feel that EQU is a different case. There are three logical options. Two of these (A and B) would be no brainers to yield a significantly higher share price than today's close in my opinion. The third (C) is one that the market may not readily see the value in and not bid up the share price sufficiently for us shareholders to celebrate (similar to NVA after their announcement).
A) The sale of the Canadian assets and creation of a US based income trust. There would be significant share price appreciation for three main reasons:
- Establishment of a significantly high yield. Investors want yield. Equities with high yield are in high demand.
- Maintenance of nearly all of the production volume. "A bid in the hand is better than two in the bush"
- Elinination of over half of the companies debt
B) The sale of the whole company. This goes without saying. At least $5 per share or the BOD will not sell and re-steer toward A or C.
C) The sale of the US assets. This one has the most risk of the market not seeing the value of holding EQU at a significantly higher share price level than today's close. The main reasons for this may be:
- Company production vastly reduced (like nearly starting over). Look at VERO.
- Company would be debt free and have ~$100 million in cash (which is $3 per share), but market may not translate this cash into share price.
- Difficulty valuing a company with no debt, relatively lots of cash, and very low production level with quality Cardium and Viking assets (birds in the bush).
I am not saying the option C will not yield a higher share price than today but in my opinion is the most vague and less transparent in articulating the companies value.