Offer range could be 48-95 centsUnder certain assumptions, Kramer's offer could net tendering shareholders less than 95 cents. Depending on how many shares are tendered above 51%, the offer could net the tendering shareholders as little as 48 cents per share.
Whether this is a risk depends on how the offer is written. As you know, Dr Kramer has not yet issued the offer circular, so this may be a non-issue.
My logic is this: Dr Kramer's press release says the offer is conditional on getting 51% of the shares AND on 100% of the directors resigning. I worry that the replacement directors appointed by Dr Kramer may not look out for the minority shareholders if Dr Kramer decides to not take up the other 49% of the shares.
If you assume Dr Kramer decides to never take up the other 49% of the shares, but instead winds up the company, pays off the remaining building leases (several million dollars) and pays the receivable on the books to himself for dividends foregone in his holding company, then the trading price of the remaining 49% of the shares will likely go to zero. Or some low number like 10 cents.
Assuming that scenario, then if 51% of the shares are tendered, Dr. Kramer would need to buy them all. The tendering shareholders would get 95 cents for their shares. Everyone else's shares would go to zero. But if more than 51% of shares were tendered - lets say 100% were tendered - and Dr Kramer took up enough to get control with 51%, he would do it pro-rata. He would give each shareholder 95 cents for half their shares and would give back the other half of the shares, which would become worthless. Net to each shareholder would be 48 cents.
The right answer is in the range of 48-95 cents because it depends on how many shares are tendered between 51% and 100%.
The offer circular could avoid this by providing an enforceable guarantee that if Dr Kramer gets 51% he will buy the remaining shares. Or maybe there is something in the BC Securities Act which protects minority shareholders. I am not a lawyer, so I don't know.
I think anyone paying 90-95 cents for the shares today is buying a lottery ticket on the results of the arbitration. If they are only buying into the offer, then they risk having paid too much.
I don't own any shares right now and until I see the offer, I won't buy any.