Long Run Explor Ltd Ord WFREF

RISK / REWARD

[BlueCollar51]

Some posters on this board are questioning if the odd are good that the offer will be accepted and the transaction successfully closed why isn’t the LRE share price 50 or 51 cents.
 
Ask yourself how much you would be willing to pay for LRE shares today knowing that although the odds of the offer being accepted are good there is no guarantee.
 
Assuming that the offer is accepted in the “Best Case” the money will not change hands until late April. It is possible that it could take longer for the transaction to close if at all. (There is no guarantee)
 
More often than not if you have a question all you need to do is look at it from the other guys perspective and you can answer it yourself !!
 
NOBODY (rational) assumes a risk unless the “potential” reward is attractive !!
  
As Always; Do Your Own Due Diligence; It’s Your Money !!

[HamSandwich]

Anyone that asks why it's not trading at 50 or 51 (ie. reflect) is a fng muppet. That's a 2-4% arb.  Hell even when two AAA rated credits have a buyout it's not always going to be within 2% 3 months out. We're talking about a Chinese buyer and a broken penny stock.  There's a reason why the arb is so high. If you think this should be trading at 50-51 pre-vote as a

[uograd]

Exactly. The arb on the Talimsan/Repsol deal was still about 8% even after the shareholder meeting to approve the deal because they still have to get government approval to get it done. I suspect the arb here will drop to about 15-20 per cent after the shareholder approval on the 29th so stock will likely trade in the low .40's.

[BlueCollar51]

Another example is the Superior Plus (T.SPB) takeover of Canexus (T.CUS)   It is a bit different in that it is a share for share offer that was approved by the Canexus shareholders on Dec 11 / 15   There are some major regulatory issues to be resolved which will take some time and there is no guarantee that they will be successfully resolved.   The CUS shares have been trading at 20

[wilwal]

My understanding is that the FIRA process is pretty reliable at 45 days.

[BlueCollar51]

Personally I don’t think that there will be any Canadian Regulatory problems. The PRC is a bit of an unknown. Hopefully Sinoenergy learned from the New Star deal and there wont be any difficulty with the PRC Regulators. As Always; Do Your Own Due Diligence; It’s Your Money !!

[wilwal]

Yes, they are subject to review in the PRC too, but the fact that this deal is so highly leveraged, it's not going to be a huge outflow of cash.  $175 million to start for the shareholders and deb holders, and perhaps $100 million later this year subject to change.  Besides, I think SinoEnergy is pretty well connected.

[BlueCollar51]

There is a “Credit Agreement Escrow Amount” of $100m that Sinoenergy is required to deposit to close the transaction with the Long Run Security holders. They will need abt. $275m cash in total to close the deal. What happens after that is between Sinoenergy and the Lenders.   I found this in the Information Circular. It appears that Sinoenergy has done everything possible re the PRC

[wilwal]

When you examine the detailed effort that Sinoenergy have put into this, it raises the likelihood that they will follow though to completion to a high probability. It's little wonder that any deb buyer at this point can't buy any significant volume of debs until the high $60's.  Clearly deb holders expect this to go through. One thing deb sellers need to realize is that buyers

[BlueCollar51]

We could be getting ahead of things a bit. The offer has to be accepted on Feb 29. The odds look pretty good but it’s not a fact until it is.   Assuming that the offer is accepted the odds of the deal closing by the end of April also look pretty good.   It should be clear by now that Sinoenergy is committed to this offer, have the resources to get it done and have done everything

[wilwal]

Exactly on the debs. For deb holders, that means if the deal closes on April 30th, you will be paid $798.00.  Deb holders need to be careful because normal deb trading features accrued interest being paid/received at the time of the trade.  However, in this deal, if you sell before closing, your buyer will not pay you any accrued interest and the buyer will receive the full $48.00 upon

[Reflect]

HamSandwich you are just what you say you are - a ham sandwich. In business deals such as this, the prospective buyer (and this is the norm) accumulates a pacific quantity of shares in order to have a say at the table & then proceede with negotiations (bid) to buy. This never happened. LRE mgt. & certain shareholders represented the Chinese at the table & put forth their accumulated