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Zargon Oil & Gas Ltd T.ZAR


Primary Symbol: ZARFF

Zargon Oil & Gas Ltd is a producer of oil and gas. It is engaged in the exploration, development, and production of oil and natural gas in Canada and the United States. The company works on three phases of oil reservoir exploitation which include Primary recovery, Waterflood recovery, and Tertiary recovery. Its portfolio includes Alberta plains north, Alberta plains south and Williston basin projects.


GREY:ZARFF - Post by User

Comment by funfacts2018on Dec 19, 2018 4:33pm
56 Views
Post# 29137174

RE:RE:post conversion

RE:RE:post conversion

Your hypothetical share price made no sense to to me, but it took a while to figure out exactly why.

Currently there is roughly $42 million in debentures and 31 million common shares.  A hypothetical buyer could offer a 20% premium to shareholders ($0.12) and a 2% change of control premium to the debenture holders, acquiring the company for a total cost of $46.6 million.

If this transaction goes ahead, the new common share float will be 460 million shares.  Assuming a share price of $0.12 - the low end of your "realistic" range - the purchase cost would be $55.2 million.  

Why would any would be buyer offer almost $9 million more, for exactly the same assets, as they could get it for today?  In fact, by my estimate, a buyer could offer up to $0.40 per share today, a 300% premium to the $0.10 share price, and an almost 900% premium to today's stock price, and pay no more than they would in "realistic" $0.12 cenario.  I see no reasonable likelihood of a share price of even $0.10 in the near future; any potential buyer will be looking for the debenture holders to take a substantial "haircut", not offering up a premium.

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