GREY:HRIVF - Post by User
Comment by
bart_dcon May 27, 2010 3:50am
395 Views
Post# 17135150
RE: share price
RE: share pricejp,
they would want the share price of HRG as high as possible or at least at fair value of around 1.50-1.80 CAD.
Why?
Because Severstahl bought several gold companies, in which they a large part or the majority of the shares.
They hold all this assets in a separate entity, for exemple Severstahl gold. All the shares of this Gold entity belong to Severstahl and are on their balance sheet.
If Severstahl wants to sell a maximum of 49% of the shares to the public to raise cash and still maintain control over the assets they would want to receive a price for their Gold entity that is as high as possible, right?
Now if they want to sell their Gold shares to the public and they value their holdings in HRG at 1.80 CAD the bankers or public would not want to buy the Severstahl Gold unit that is IPO'd because they would be able to buy the HRG shares directly on the market for let's say 0.75 CAD. So Severstahl would have to sell their Severstahl gold entity much cheaper and they really don't want to do that.
Best case scenario for them is a high valuation on all of their holdings (High River, Crew, ...) so that the value of their Severstahl gold holding is maximized upon flotation (IPO).
I hope this makes it clear.
If not, please feel free to ask more information.
Best regards,
Bart