Zargon Oil & Gas Ltd ZARFF

RE:RE:ZAR: Insiders own 10% with the CEO owning 2.4 million shares

[funfacts2018]

stockfy wrote:

"However, the insiders including the CEO who controls the game and ZAR's fortunes  have strong motivation to push ZAR's stock much higher than 10 cents, so the debenture holders will receive MUCH LESS shares in December 2019 when they convert at 95% of the then price of the common stock if they don't accept the current offer for conversion at 10 cents."

 

stockfy wrote:   According to the latest MIF filed on Sedar, Craig Hansen owns 2.4 million shares, not 1.5 million shares I wrote in my previous post. Also:

"As at April 19, 2018, our directors and executive officers as a group, beneficially owned, or controlled or directed, directly or indirectly, 3,112,274 common shares or approximately 10% of our issued and outstanding common shares."


Nevertheless a couple of short-sighted debenture holders/posters here ignore this key fact. They also ignore the reasons of ZAR's recent drop and erroneously think that ZAR's stock can keep falling reaching 1-2 cents in Dec 2019, which will allow them to have to take almost 100% of ZAR. 

However, the insiders including the CEO who controls the game and ZAR's fortunes  have strong motivation to push ZAR's stock much higher than 10 cents, so the debenture holders will receive MUCH LESS shares in December 2019 when they convert at 95% of the then price of the common stock if they don't accept the current offer for conversion at 10 cents.


With ZAR at 15 cents in December 2019, the debenture holders will receive much less shares than what they receive now at 10 cents.

With ZAR at 20 cents in December 2019, the debenture holders will receive even less shares when they convert....

Simple math.
 

Let's make the math even simpler:
I don't care how many shares I get for my debentures as long as the shares have real value that allows me to recover the face value of the debentures, plus interest. That was the whole point to buying a debenture, rather than common stock in the first place.

As soon as this "deal" was announced, the market reacted indicating that the "real value" of common share is 4 cents, not 10 cents.  Absent something else changing (like oil prices) the share value is unlikely to jump if this deal is rejected.  So, regardless of where the shares actually land, 4 cents is likely closer to reality than is 10 cents.

The CEO, and the rest of management, don't get to vote on this, only the debenture holders (and it looks like the CEO is the only one on the management team with any). 

Finally, if motivation alone could drive up the share price, this management team is easily one of the most UNmotivated that I've seen.  So I'm discounting "motivation" in my decision making.