Just speculating, but say that Luxor is in effect bankrupt(though the bottom article doesn’t say that, and far from it, I will continue with the possible speculation regardless, since a shell takeover of a superior company is ridiculous and only explained because of (1) bankruptcy manipulations to address the bankruptcy problems or (2) Luxor actually believes the gold era is over and just marginally breaking even with slight profits, from now on.)
because market sectors can go bankrupt waiting for their sectors to turn around, and that is no truer than in terms of the gold sector as held down by the FED and accomplices institutions the past 4 year. Keeping gold and gold sector down as not to divert money away from an in effect bankrupt west, causing its collapse sooner, or stopping steps to stop the collapse, if possible, sooner.
Now it is not true that CRK is bankrupt, far from it. But it could be true of the major investor Luxor Capital Group who could have seen its investments fall perilously during the FED’s and its financial accomplices keeping gold down extremely the last 4 years, leaving Luxor beholding to larger capital groups now, calling in the debt, and CRK being parceled out to the shell arrangement with NGN to help pay it?
Since how else do you explain a friendly merger with an empty shell that can’t afford taking over CRK for 37 cents time 476 million shares or $176 million, but is getting control of CRK, the by far dominate and successful company, for a mere $20 million dollars, leaving it in NGN’s name and with plan to merger other mid tier producing gold companies and consolidating shares each time, if not nearly as much. And that is only at CRK’s suppressed P/E ratio of 3.42 or so, when most producing gold stocks even at suppressed price levels have P/E ratios of 15 or so. That would be 5 times CRK’s price before the merger announcement or 5 times 25 cents equals $1.25 and no possibility of an excuse for a merger into a shell, with the shell getting control as it were.
Whether Luxor plans to sell its 69 million shares of roughly 53% control of NGN in a proration way after the merger, to a beholding creditor it is in debt to ($20 million / 69 million = 29 cents, or 29/5 = roughly 6 cents in former CRK shares), I don’t know. Since I am speculating why this crazy merger in the shell’s favor is taking place? Usually it is the other way around and the shell is gobbled up and used by a private company to go public in a reverse takeover. However if Luxor is indebted, I think it has found a way to pay off debts through the merger of CRK into a shell, that big creditors can buy into, expecting other good mid tier gold producing companies to be merged into it, and still keep major shares amounts (if not majority anymore) in the new shell company’s control of CRK and other merged mid tier gold companies to come.
This may look good for average investors and minority CRK shareholders but it isn’t because consolidation of shares is done each time merged mid tier gold companies happen, if not as much as with the initial merger of CRK into the shell NGN, retaining the shell’s name and not the real company of the two, CRK’s name.
I don’t wish ill harm to Luxor since it helped to make CRK the successful gold producing company it is, but if Luxor is financially in distress and beholding to others, then parceling out CRK to the shell NGN and who knows what arrangements after that, is not the ethical way and fiduciary responsible to CRK, way, to do that, if does save Luxor’s hide in doing so.
Really, Luxor would have to declare bankruptcy which CRK would not be included as Luxor’s assets to divvy up to a creditor, since CRK isn’t a private company but public company. So CRK shouldn’t be parlayed in shenanigan ways as an alternative way to pay off debts, but hide that fact in contrivances like a friendly merger with an empty no nothing shell NGN, with past good gold producing companies, management, notwithstanding their no nothing shell status now. Though Luxor’s shares in CRK would be fair game to acquire by a bigger creditor Luxor was beholding to as payments for debts. But it is as if Luxor wants its cake and eat it as the expression goes, and pay off its debt but in an contrivance way that doesn’t declare bankruptcy and remains a going concern and player in the world of high finance.
Assuming Luxor Capital Group is in financial distress bordering on bankruptcy, and using CRK to get out of it, to Luxor’s advantage and not minority CRK shareholders’ advantage, which I have no idea is the case or not. Just speculation of what happens to investors in sectors that should be taking off but have been suppressed or delayed for years to take off, where can go bankrupt in the waiting. And just trying to make sense of an incomprehensible deal with a shell company where the shell gets the company for in effect $20 million, for who’s advantage after that I don’t know. Though Luxor still seems to have a little over 50% majority control, which could shrink if other big creditors get involved with upcoming expected mid tier gold companies mergers with NGN.
However according to this 3
rd quarter 2014 report, Luxor Capital Group is holding its own, so maybe it’s the 2
nd reason above that Luxor is merging CRK in a shell, to the shell’s advantage, that of Luxor unbelievably believing the gold era is over, QE money printing saved the day and still saving the day, and rearranging CRK in its portfolio, if not out and out selling it, by giving it to a shell, it still has majority shares and control of. Regardless how it crushes CRK minority shareholders in the process, since shares are consolidated in the process and each time merged mid tier gold companies happen?
https://marketrealist.com/2015/01/highlights-of-luxor-capital-groups-holdings-for-3q14/?utm_source=yahoo&utm_medium=feed&utm_content=toc-1&utm_campaign=luxor-capital-group-amends-13d-rcs-capital-corporation