Can a Big Wei ensure a Happy Ending for All?Anyone else hot out today? Who is the hottest? It is about 95F here on FL west coast which is hot for us. Surely someone saw 100F+ or 38C+ today and what general area of the globe? They are showing Greenland now on the news and it is almost 60F. I spent a week at Thule Greenland decades back in early August and temp never changed from 33F. It is melting much faster than forcast.
Here are my less than .02 on this news and my guess of the end game since FEC cannot develop offshore Guyana alone after Wei-1 and CC's plan all along was to increase value of FEC and sell. I think this latest deal for FEC to gain over 2/3rds of the concession has been the final part of CC's plan all along. CC will also own in excess of 40% of FEC shares after the ongoing Dutch auction ends this week. For any who have not followed the story.....Gab de Alba is the Managing Director of Venture Captialist " Catalyst Capital" who will soon be 40+% owner of FEC shares and also the Chairman of FEC who owns close to 80% of CGX shares and also the Co-Chairman of CGX. So, dispite what appears to be a strange set up, he is obviously calling most of the shots.
CC has been involved in numerous lawsuits in recent years, many still on going and at least one filed by a State of Missouri Pension Fund, is suing over the failure of CC to adhere to the prospectus used to coax them to invest a large sum into the Limited Partnership holding FEC shares. Here is a link to a site devoted to CC Litigations. Link to CC Litigations or try this if link does not open
Home - Litigating with Catalyst Capital (catalystlitigation.com) So I contend the various lawsuits and poor return on most of the other CC distressd assets has CC needing to sell FEC within a year at most..
But what would happen to those of us who own CGX shares? As, myself, like many, own both companies.
Because the fact that FEC owns almost 80% of CGX shares, FEC can afford to write a deal that would overpay GCX sharesholders for their shares due to that 80% share ownership. Thus to avoid anyone complaining about CGX and its shareholders getting screwed, FEC can afford to pay on the high side as they are going to get 80% of that money back, assuming CGX shareholders are hopefully bought out with cash. The last thing FEC would want in the event of a big sale is it being tied up due to it appearing FEC is screwing CGX and its shareholders. FEC would want any sale to go through fast with all happy over how generous it is for all..
A simple example, regardless of the size of Wei, surely it is not going to be a duster on all levels, but lets just use the example that CC forces the sale of FEC after Wei due to needing to monetize one of their assets. And the price paid to buy FEC with all assets/liabilities is $5Bil.U$ net. FEC can then easily afford to offer to pay $2BilU$ for the outstanding CGX shares since they are going to get 80% of that $2Bil in shares or $1.6Bil back in payment for their owning 80% of CGX shares.
So, FEC the example made a very generous offer to buy out CGX shareholders and hopefully the deal quickly is appoved by Guyana, TSX and CGX shareholders. I would be very happy and hopefully all are happy, and FEC has $4.6Bil left for FEC shareholders with FEC owning more than 40% of those FEC shares, they get a nice payout. And a very busy Gab de' gets a very nice payout from various options etc and rids himself of what has to be one of his biggest head aches.
Does this seem a feasible end game? The numbers surely would be different but illustrate my 02s worth. Does my general logic make $ense? And under this wild pipe-dream example, wouldn't CGX increase slightly more %wise from today than FEC? Stockwatch has been down all day so too much trouble for me to do the math. I do think the #1 contender as a buyer of FEC is CNOOC as much for the ports, particularly for Puerta Bahia due to location as the O and G.. I just hope others also want FEC.
Again, anyone want to complain about being at the hottest location today? Who beats my 95F? Surely many.