African SpinoffCGA wants to spinoff its African assets into a separate publicly trading company but CGA will still maintain those diluted post-IPO shares??? I don't get it. Their reasoning is that the market will provide a more concrete value on those African assets via NewCo but since CGA still has partial ownership by retaining those shares, the market probably still provides a negligible or holding company type discount to its value.
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They instead should create NewCo and issue those shares directly to CGA shareholders which would allow each individual to decide whether to continue participating or to unlock value by divesting the NewCo shares. This is exactly what Exeter Resources did and their formula did create additional value by separating their Chilean and Argentinian assets, since the combination of the share prices of the two new companies exceeded the value of the share price of the old company.