FIU is insolvent. The debentures are maturing on June 30 and FIU has no cash to pay. It can't even make its interest payments, and doesn't even have enough cash to cover its current operating expenses (hence the $10mm bridge loan from GDO).
The creditors are driving this bus. If shareholders vote down the deal, FIU will just delay it until after June 30. Once June 30 comes, debenture holders will own 81% of FIU once their debentures are converted to shares. The current "dissident" group's 17% stake will be wittled down to 3%. The current debenture holders have 52% locked-up to the AGA and GDO transactions, and therefore a post-June 30 vote is all but done if it comes down to it. In this scenario, shareholders will get far less than the current proposed
.26 per share. In the end, creditors will get repaid one way or another. Unfortunately, as shareholders you are on the bottom of the totem pole.
I disagree with the notion that this company was not well shopped. The Russians claim that “First Uranium’s Board has not exhausted all options”. The company ran a 7 month sale process, which went no bid. It even sought financing from Vulisango but this fell through. Clearly no one wanted to buy FIU in a corporate sale. It had to break up the company in pieces to get the liquidity needed to satisfy its debt obligations. As for alternative transactions, FIU maintains a "fiduciary out", where it is able to accept all superior proposals to the current AGA and GDO deals. Have you seen any superior proposals come along? Neither have I...
As shareholders, if you want to back-stop a rights offering of $150mm to pay back the debentures, that's great. But at the end of the day, outside of a rights offering you are essentially powerless, sorry to say.
The market agrees with me. FIU shares are trading at
.15, significantly lower than the potential
.26 proceeds from liquidation. Anyone buying now would vote Yes to get a 73% return.