RE:RE:RE:RE:Will Management and Board Survive??? Kensho,
I agree that if they don't replace some management/BOD proactively, there will be a push at the AGM.
The only wrench I would like to throw into the discussion is this. Remember when the last suitor(s) were looking at IAE. It was before Athena was producing, and there is speculation that the suitors were not willing to take too much risk buying the company before Athena's production could be observed. In other words, the suitors were not willing to cough up even close to what the BOD/management believed the company was worth. Turns out, the suitors made the right decision as far as Athena production goes.
The same could be true this time around. Trying to sell the company BEFORE stella means the suitor will be taking on the risk, and that the purchase price might not be all that attractive. Will they pay 1.5 billion BEFORE they observe stella production? It's not like IAE can pull the wool over the eyes of the suitors.
Fast forward to xmas 2015/spring 2016. Its hard to know what things will look like then, and so I think its very difficult to predict what will happen. Where the management/BOD and Institutional investors in the background will want to go from there will depend on the following factors:
- The Price of oil: $45 or $65 or $85 makes a world of difference
- IAE's production and how much has it declined
- Iae's share price
- Cash flow
- Debt load: will they have incurred more unforseen debt?
- Have they, or will they, breach their debt covenants?
- Are there more possible delays with Stella?
- Who is the CEO? Whether they've replaced management or not, they may trust that person's vision.
So while IAE might be sold as you suggest, under the circumstances you described, I am not sure they would get the price you are suggesting if the price of oil is at $65 or less. The suitor might not want to pay 1.5 billion and take on Stella performance risk. But you could be right.
It could also pan out like this. In the coming spring/xmas timeframe, if oil has recovered reasonably, and suitors are not willing to take risk and pay a reasonable price before stella startup, the BOD/Management/Investors might feel its worth it to wait until stella starts up. If they are relatively confident about stella, it doesn't make sense to sell the company for a low ball $1.50 three months before it comes online. If the oil glut is looking like it is in the rear view mirror, and Stella produces what it is supposed to, the share price will be much higher than $1.50. Could be back up to $2.50-3.00 range.
All speculation for sure.
However, in the short term, I still believe there is a rough road ahead because of the above uncertainty. Here are additional reasons I think the share price will suffer in the next few months:
- the shorters always push the stock waaaayy lower than anyone can believe is possible
- scared retail investors always sell shares waaaaaay lower than they should
- Management has lost credibility at least in the short term
- Q4 2014 results are coming, and everyone is wondering what surprises there will be
- Q1 and Q2 2015 results could be scary depending on the price of oil
- investors are afraid RIGHT NOW that Debt/covenant issues could be an issue in the future, and so they will wait to buy until things are more clear
- the oil/gas sector has so many other buying opportunities that people will take before potentially coming back to IAE in 8-10 months.
So short term you have selling pressure, but not a lot of buying pressure. I think it'll test the low 0.70 range, or maybe even a jaw dropping 0.60 range (just because I am always so shocked how low those shorting ba$tards push stuff down)
Disclosure: I have around 10,000 shares now, and plan to buy back in the future if things look good.
GLTA