Some analysis from the creditors list.I think most of the engineering debt is from previous management era, but I cannot validate that. I have no idea how the big Computershare debt has been built. 2017 financials report a debt that is not far from the 2018 one. It seems not too far from the current total amount that is due. The debt grew in the last 18 months, but it seems that a big part of the debt reported in the notice to the creditors is mostly from previous Argex era. We would have to check the 2016 and 2015 financials to be more sure of my hypothesis.
I said previously that an hypothesis for the timing of this event was that the creditors previously (pre-ECEC news) could not get anything of value from Argex, so they tolerated the debt and waited. For example, a year ago, if Argex would have gone bankrupt, they would have get no money, the tech (not proven as much) but with no deal. Now, that we have an arrangement with a Chinese multinational and a ready technology, they might have thought that it was the time to be paid and go after Argex.
The directors own only 13% of the debt. We do not know to which directors and how it is distributed among them. It does not seems a winning position for them versus Argex surviving, coming back on the TSX and pursuing its business opportunity.
There is 46 creditors. If Argex goes bankrupt and the remaining value of Argex is the technology, I do not understand how they would create money value from it. They would have to create a private co and restart current Argex ECEC deal under that new co. This means they would have to put money again in this venture, they would have to support and be involved in that co. I am pretty sure they do not want that. Too complicated, too risky again. My take is that they want to be paid as much as possible and forget Argex.
For the directors to benefit from a bankruptcy, the only scenario I can imagine is that they would offer the other creditors to repay them, but keep the technology. I do not think it can occur. Here, it would be a clear act against Argex shareholders, because it would show that the technology has a value. That they know it and want only them to profit from it. It would be a breach to their duties. And I think it would open a legal case from the shareholders against them. The Trustee, PWC, is there to protect Argex, and I do not think they would support that scenario.
Maybe, the creditors can take control of the tech, sell it directly to ECEC and be paid like that. But in the current context, I think they would get their money back but not much. For the directors, it means probably only their $620,595,30. This is nothing.
I think Argex took all its cash to pay Valleyfield plant employees and probably only them. It is the most critical part of the company. The small Valleyfield plant must absolutely run and executes tests on the ore samples.
We all know that the communication is one of the big weakness of Argex. Now, we know partly why : they do not have cash to do any of it. The website updates might suffer from this bad financials too : maybe the webmaster refuses to do the update because of bad payments.
My other thoughts are going to AlNaimi. To me, this financial situation shows that he has a lot of skin in this game. Tolerating this financial risk by putting his time on that venture, asking a brother to put money in, dealing with all the creditors pressure. He had to believe it and be passionate about Argex success to stayed the course of the business.
I am sure he did a lot of phone calls and meeting to tell the creditors to give the business a chance. Please believe, we are progressing…
Now, if Argex can show the creditors and the court that we have something concrete and substantial (revenue in a reasonable timeframe), I think we have a chance that the creditors will accept a debt consolidation. And it is probable that the court will extend the protection duration. So it might be very long before we get more news from the ECEC deal.
It seems that Argex management is in a total blackout. I think that they should at least answer politely to shareholders requests. But maybe, they choose to simply avoid any contact to simplify the business handling of the current situation.
Tom