RE:Clauses for Causes why a 1.26 COR?stanley wrote:
Lurk & Learns ONLY:
SPECULATION is pretty rampant on the FCU SH board wrt the thorny issue of the 1.26.
It is not my thesis as to what is the perfect number; as my thesis is despite the board noise, this will be a moot issue; with the declared turned euphoric voters scrambling to get the board's advice/primer on vote reversal 101.
Recall, this number (I call it a Coefficient of Restitution - aka COR) was based on a quick & dirty NPV of both the FCU & DML's assets.. at a point in time.
A fairness opinion is also based on a point in time. The point of contention is mostly because the rate of expansion of the FCU resource is greater than that of DML's. The time and the full extent of DML's assets (classes and/or categories) could be understated. e.g. Mongolian sale @ $26 mln. FCU is a one location (PLS) play while DML has a few assets on the Eastern side of the Athabasca Basin (AB).
Point being; if we look at the PCS & K+S as a case study for PPS takeover impact, ours is not an isolated case of alleged manipulation as some would have you believe. In fact it is exacerbated by negative market conditions.
Thus in a broken needle analysis, when the PPS does not migrate to the predictions of the analysts or respond to a MRE or incremental spectacular drill results and the stock appears to be "contained"; the of list of potential guilty parties can be compiled by firms on Bay Street.
These firms analyses trading patterns (historical to present). So one can assume that Dev must have some basis (e.g. Joe Harry Window and probabilistic analyses) for making his merger decision.
Rightly or wrongly, Dev decided to saddle up with the Lundin stable to wait out the storm. Why would LL, an astute billionaire even bother? Was it self-serving or magnamous? Did LL do a real or perceived analysis if it was a DR request? The potential sources of the storm have also been well (miss) documented on this board.
The reasoning behind Dev's (apparently hasty, apparently ill-advised decisions) have been the topic of adnuseum debate and conjecture. Thus, using the above as a bit of a background, we may want speculate on what (potential facts) could have precipitated Dev's decision to propose or agree to a merger:
1. Who was the initiator of the proposed merger?
2. Who is suspected of "jamming the FCU needle"?
3. Why was DML selected from the Lundin stable to be the window merger participant?
4. Is it about money or legacy? Are Dev & Ross "Set for Life" monetarily?
5. Assuming a 18 to 24 month overhang how does the PEA assumption of $65 (in four years) compare to those of the analysts for a property whose timeline to production is closer to 10 years.
6. With the expansion of the PEA to a land based R600W and now Forrest Lake, the true incremental value of PLS has entered a higher potential valuation "orbit", i.e. under unobstructed "market" conditions.
And this is my point, i.e. the analysts do not place causal caveats wrt the valuation gap between their predictions and any alleged manipulation. Something well known to a certain segment of "the market" with a vested interest in "the outcome". e.g. like kids spitting on an apple.
Meaning, we could still see a blockbuster announcement (give it <1% or="" less="" chance??)="" b4="" the="" october="" 14th="" vote;="" but="" distractions="" sometimes="" presage="" an="" unexpected="" outcome.="" it="" could="" be="" a="" scenario="" where="" the="" plethora="" of="" declared="" voters="" without="" hard="" fact="" are="" basing="" their="" incessant="" rants="" on="" their="" own="" selfish="" agenda="" or="" doing="" so="" on="" behalf="" of="" a="" possible="" purloiner.="" uglification="" being="" a="">
Also noteworthy in this conversation was the FACT that the answer gives for the 1.26 COR was to avoid significant paperwork and disclosure if a scenario other than a 50/50 ownership structure was selected. A true "smoke house judge" have to give some consideration to this.
Point being what was the real reason behind the 1.26 COR? What we do know it that it was done in haste and done at a point in time and was based on the assets selected for the NPV analysis.
Now if DML had included some other assets (e.g. some that could become noteworthy at higher prices) that may not have made the list, the FCU chorus may want to be careful what they ask for.
Thus, if we consider the possible options for the proposed merger and the potential announcements in to run-up to the vote; with and without the $14 mln break fee, is the announcement of a blockbuster agreement deserving of a shock & awe handle possible?
Assuming we DO have entities with no fear of the (some say hapless) OSC, someone with long term requirements that is FULLY cognizant that FCU is the best known discovery in the last half century with an AISC guaranteed to attract the attention of someone with a history of, "feigned disinterest" or someone with grandiose plans to reduce serious pollution issues going forward. Could the next few days portend and potential announcement(s)?
In an announcement and attendant whipsaw, the final price and terms and conditions bear no resemblance to the (internally or externally) manipulated trading PPS.
BWDIK? Pressed for time, what COR was needed to get a 50/50 "partnership of equals"?
DYODD - GLAP
Cheers
Stanley
Attempting to cloud the issue by talking in riddles yet again Stanley. The takeaway from your ramble is VOTE NO.