GREY:ZARFF - Post by User
Post by
stockfyon Dec 14, 2018 8:24am
129 Views
Post# 29114677
Conversion at C$0.10, all-stock deal NOW with acquirers DOWN
Conversion at C$0.10, all-stock deal NOW with acquirers DOWN If ZAR converts now, it will have zero debt.
With zero debt, ZAR will certainly will be attractive both to public companies and private companies who want to go public quickly.
If a deal takes place now, it will most likely be an all-stock deal, so all the ZAR holders will benefit from future capital appreciation because ZAR's potential acquirers have dropped a lot lately. This is a key parameter that most ignore. This will not be the case if the conversion takes place in December 2019. ZAR's acquirers will recover by Dec 2019.
Another tailwind for a deal post-coversion is that Zargon's significant tax loss credits are significant.
Some debenture holders might think that they could potentially get 1%-2% more from ZAR in December 2019. This is highly questionable first because of the admin costs and legal costs associated with the process and second because WCS has risen a lot lately and has returned to 2017 levels when ZAR was generating positive operating cash flow. So ZAR can sell its North Dakota assets in 2019 at a decent price and the stock could jump well above 10 cents. In this case the debenture holders will receive much less than what they receive if they make the conversion now at 10 cents.