Do WOF valuation issues merit a better deal? Will this Almonty acquisition fly as proposed? For the deal to go through, we know two-thirds of the voting common shares have to vote in favor. Outside of Dundee and Almonty, I wonder how many of the other institutional and retail shareholders are on board with the adequacy of the existing offer? Stated otherwise, how did we arrive at .07 cents +- (or approximately 40% Almonty ownership by Woulfe shareholders) as a fair average share value? How about a compromise to 49% ownership?
I think WOF is undervalued in this deal. For my potential dissent purposes, Canadian regulatory authorities assigned to approve this deal should consider whether 2015 WOF share price and volume have been largely driven by the Woulfe board's timing of news releases about important company progress and potential acquisition/merger discussions. For instance, we don't know when the Woulfe board became aware of the results of its final feasibility study which appeared as very important news. All we know is that this seemingly vital trading information was released on 1/23/15. Share prices jumped, until, coincidentally, on 1/27/15 Woulfe and Almonty announced their proposed "merger" wherein Woulfe shareholders were to receive .08 cents a share. Ostensibly as a result, Woulfe's share price dropped and languished. If merger discussions occurred, I am not aware that Woulfe made any public disclosure of such merger discussions prior to the 1/27 announcement. Was the Woulfe board legally required to publicly disclose the existence of merger negotiations if they were occurring prior to 1/27? Could this have been a reason why the Woulfe board simply later renounced the merger as inadequate, only for later to support less money? We know that after the merger was called off, share prices remained in a tight low price trading range. Some on this bulletin board, this author included, speculated that share prices might have been artificially suppressed or manipulated during this period.
Subsequently, the issue of the timing of releases of important trading information was again raised by posts on this board. We didn't know when the Woulfe board had access to the very well received news of the CAPEX and feasibility numbers dated June 1st, 2015. All we know is that this seemingly valuable trading information was not publicly released until July 7, 2015, which again, coincidentally, was one day before Almonty announced its proposed "acquisition" of Woulfe for the "premium" value of essentially.07 cents a share.
It would be interesting to know what WOF share prices might have been had the June 1st CAPEX report been disclosed on or about June 1st and Woulfe stock allowed to run before Almonty's 7/8/15 acquisition plan was announced. Maybe the report wasn't available to the Woulfe board prior to its disclosure. All we know is that, unfortunately, this potential WOF shareholder opportunity never occurred because the CAPEX report was not released on or about the June 1st date. Why? We don't know. But, hopefully Canadian authorities will find the timing of this disclosure relevant to the Woulfe valuation issue and approval process generally.
In summary and in my opinion only, it seems a reasonable inference that Woulfe share prices have been directly impacted by the Woulfe board's timing of the release of its 1/23/15 final feasibility study, the 1/27 proposed merger and the possible existence of negotiations leading up to the merger offer, the 6/1/15 CAPEX report, and the acquisition plan. I do not know whether Woulfe timely released information concerning the important events noted above. However, I think these releases contained material facts of importance to Woulfe shareholders and share price. If this is true, than I believe a duty of timely disclosure was implicit and the issue of timely disclosure is relevant to Woulfe valuation.
Therefore, concerning regulatory approval of Woulfe valuation in this acquisition, it is my opinion that relevant questions on this disclosure issue to be addressed by BC Supreme Court should include: 1) Did the Woulfe board have a legal duty to timely disclose the above information? 2) If so, did the board timely disclose the above information? 3) If not, for valuation purposes, what, if any, material impact did the failure to timely disclose this information have on the fair trading value of Woulfe's stock during the relevant trading periods involved?
If this Almonty acquisition goes South, barring a white knight, I assume a possibility exists that the company goes into receivership or reorganization and Woulfe assets are ultimately placed on sale in the world wide market. By way of a very arbitrary macro example and my hypothesis only, if WOF assets sold for 75 million, shareholders would receive approximately $.17 per share, less costs of administration of the bankruptcy estate (75M – 15M +- secured/priority debt = 60M net /350M shares= $.17 cents). Would a bidder pay 75M? We don't know. All we know is that, thus far, no other individual or company has come forward to compete against Almonty with a hostile takeover bid for Woulfe, even though the company is effectively “on sale” now to the highest bidder. I would not like, but would vote in favor of a deal where Woulfe shareholders got 49% of Almonty ownership, rather than the approximate 40% proposed. I think there might be wisdom in this compromise for all concerned. Barring an Almonty hold harmless contingency share buy-back arrangement from Dundee, if this acquisition falls through, I assume that Almonty, having already acquired a good deal of WOF shares, will, more or less, be in the line with like the rest of us comon shareholders if reorganization or liquidation becomes necessary. Seg.