CVR Medical Corp V.CVM.H

RE:RE:RE:CVR Med Restructuring Agreement

[Looneytunes]

This is how I read the news, bearing in mind that my understanding of the technicalities around related party transactions etc is almost non-existent. There are some good points and some bad points.

On the positive side :

Everything realted to the CSS, its IP and future potential is transferred to Medical.
Any vote on the restructuring excludes shares already held by Global, its affiliates and joint actors (I'm unsure how the Medical directors are classed in this regard)

On the negative side:

GLOBAL get 55m new shares plus 10m warrants plus the 25m shares in escrow =-all the shares will be distributed to GLOBALs shareholders, ie Bakema and his friends  giving Bakema 50% of MEDICAL and effective total control over MEDICAL. Also given that the MEDICAL directors who are also his friends will own a further percentage the votes under his control will be more than 50% giving him control over all future votes and the therefore the development of the CSS.

"Following completion of the Proposed Acquisition, CVR Medical will solidify its place as a medical device company with the ability to control its own destiny and will assume all responsibility for bringing the CSS to market including clinical trials, FDA submission and all sales" - Again to be treated with a large dose of scepticism, lets be under no illusion; Bakema will still control the destiny of the CSS and the TSX needs to understand this and reject the proposal.

There is also an assumption implicit in the news that future funding will come from the issuance of millions more shares resulting in massive dilution - what is not stated is whether the first $1m of income from those shares will trigger the payments to Bakema - this arrangement was not part of the original restructuring agreement and is therefore assumed to still be in play.


Questions:

I really don't know whether the valuation of $9.8m is a fair valuation and how much of this valuation is based on future potential but there has been a complete lack of transparency in the selection of the valuer and the process used so I treat the $9.8m with a healthy degree of scepticism.