Maritime Launch Services Inc V.JFC

The mechanics of a deal

[jerrio78]

New company, interim CEO, new majority shareholders. Let's start there. Forget old deals, assets and management. 

Now starting fresh the new guys probably have 60-70% of the shares ahead of the deal. The deal came first and the guys on Bay Street were tasked by a private company to find a clean vehicle to launch the asset. Just an example: new company has 100 million asset, lead deal makers ask for a heavy discount to attract Bay Street investors to support the deal. In doing so they push the asset value on paper to $25 million (this tactic attracts huge buying interest since it's an amazing buying opportunity out of the gate). They issue 40 million shares at 60 cents to the current holders of the asset. These shares are in escrow. The story launches to $3 where they raise money. By then there are 50 million shares out with a market cap of $150 million. The 2nd round of financing is at $5 or higher. Remember that the asset holders can only trade a small amount of shares the first 6 months and any new financing falls under a 4 month hold. The beauty of this deal is anyone with free trading shares will be sitting on a lottery ticket. New buyers will be bidding it up and it will be a matter of supply not meeting demand.