The 'David Letterman Top 10' on Arcan In honor of the AGM, and paying "homage" to David Letterman, here are today's top 10 reasons to not invest in Arcan. If anyone is in Calgary and going to the AGM (assuming they're brave enough to ask questions) please ... ASK THE TOUGH ONES! They don't deserve to be cut any slack at this point.
So, here’s our ‘David Letterman’s Top 10' on this stock
10. They have a "shiny new CEO". Or at least that's the way it was polished and sent to press. New? Really? The CEO has been on the board since inception; (actually prior, back to the days of DESCO, and the reverse take-over which got Arcan their TSX listing). McCoy ... Decoy ... it's really just a move to make you think they're moving forward. Same Big Top, Same Ringleader, Same Circus.
9. If the Vice President of Exploration hasn't invested one dime of his own money, should you? (Really, you doubt me, check SEDAR. Even at today's bargain basement price of two quarters, it's still too rich for his blood!) I understand times are tough living on $300K a year Mr. Natras, but throw the investors a bone; at least prove you think the asset's worth something and buy one share.
8. This little tidbit culled from the Annual Information Circular: 17. Persons Entitled to be Present - The only persons entitled to be present at a meeting of shareholders shall be those entitled to vote thereat, the directors and auditor of the Corporation and others who, although not entitled to vote, are entitled or required under any provision of the Act or the articles or by-laws to be present at the meeting. Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the meeting. Seriously Mr. Penner? Who are you scared is going to show up? Former employees? Guys who sold their $6 stock for $0.56 cents?
7. The "Hamburg Asset Sale". Fancy numbers in that press release ... sale of the Hamburg Assets for aggregate net proceeds of $11.9 million ($12.1 million gross). The total carrying amount of the Hamburg Assets was $38.3 million, of which $35.2 million was included in property, plant and equipment and $3.1 million was included in exploration and evaluation assets. The associated decommissioning obligation of $1.4 million was also eliminated, resulting in a loss on disposal of $25.0 million. Yes, they "sold for a loss". But it gets better; Arcan continues to hold all abandonment liability for assets they no longer own. Just imagine a pipeline leak on a property you don’t own, but you are responsible for cleanup. True Brilliance. But hey ... why worry ... 40 year old pipeline infrastructure never leaks, right?
6. The "plague" factor. Yes ... I mean plague right out of the Old Testament. Read some of the Operational releases as provided by ARN. The plethora of the excuses from Executive is stunning (though somewhere along the lines they did forget the golden rule and other such Sunday School classics, they managed to remember the plagues). Year after year of missed targets ... blamed on fire, flood, rupture and other "Acts of God". Somewhere there is a Sunday School teacher weeping ...
5. Let's not forget the Stimsol Fiasco; Bought for $24MM, plus $6MM for further development. To reward themselves for such brilliance they immediately issued themselves shares in this "private company", so should it be sold later, they could line their pockets (or fleece investors ... really at this point it's just semantics). After much uproar stock options were cancelled. Stimsol is the company that keeps on taking ... $8MM to get out of a contract with a previous Acid Supplier; $1.2 Million in G & A expenses for 2012 (including severance and rent). And how much has it given back? Nothing, nada, zip, zilch, ZERO! They haven't sold a dime's worth of acid to anyone.
4. The "Golden Boy" syndrome ... Check out those salaries and bonuses ... in two years those boys have pocketed a fair chunk of change, cash up front. Yes, they've given up all those options that would never have vested given the stock price, but what did they give up? Anyone check TSX rules? They had to, it was never about doing the right thing; they had outstanding options worth more than the market cap of the company. They had to surrender the options or risk losing their TSX listing. It's never about doing the "right" thing. Oh, do read the fine print though in the Annual Information Circular; don't worry investors, they are already planning to issue themselves a new bunch of options ... they just need to find the new low first.
3. If we keep moving, you'll never find us! Seems to me they can't decide where they want to reside (though in the old CEO's days it was always something akin to a trailer park). In 5 years, they've had offices in Northland Bank Tower, TransCanada Pipelines, Jamieson Place (the golden tower), and now Altius Centre. Anyone really know what the cost of these moves were, and if the sublets are really covering all the costs? Been by a few old spaces lately... the lights are on, but no one's home.
2. The embezzlement fiasco, and termination of one former Exec. Mr. Penner (now their illustrious President) was CFO at the time. The man signed every cheque during that phase (was he the dumbest CFO, the most negligent CFO or ... ) Yes, by all means, money was stolen under his watch, this is the man we want for PRESIDENT! Excellent choice!
1. The stock price itself. Yes, it looks like a screaming deal at fifty cents. Since the "Golden Trio" of Messers Baumgartner, Gunning and Natras came on staff in 2011, they've taken the stock price from a high of $6.82 to the stunning pinnacle of success 50 Cents! Way to go Management! In a scant two years, you took a company at its peak, with $40 MM in debt, spent $260 MM raised thru a financing and two debenture issues and drove the price right into the ground. Be Proud!!