RE:Intentional errors in Q2 report?DiggeDiego wrote: After reading posts on SH and CEO.ca I wonder if there is a reason for Verde to intentionally keep the result for Q2 low? Otherwise I guess they would have answered to the alllegations by now! Why would they want to keep the numbers down? To keep the SP down? Why? Any thought?
If you are planning to take a public company private with a buyout, you usually begin by getting any significant existing shareholders onside, agreeing to sell their shares at the soon to be announced bid price. Or you get them onboard by including them as part of the takeover company (they don't sell their shares but get to exchange them for shares in the new company alongside the takeover partner).
When the takeover bid is announced you will always see this kind of wording in the public announcement: "The offer of $1.50 per share for all of the outstanding shares of ABC Company is a 33% premium over its $1.20 weighted average trading price in the markets over the last 30 days". This is meant to justify to the targeted existing shareholders that the takeover price is a good value and should be accepted. This of course assumes that the share prices from recent marginal trading actually reflects a reasonable basis upon which to value the takeover of the entire company (which we know it is not).
With this valuation practice in mind, anyone contemplating a takeover bid would wish to see the stock price ahead of the bid be as low as possible, so that the published bid price appears to be a significant premium over the recent ("prior 30days") open market experience.
There has been speculation on this and other boards, with goood reason, that Verde's one single significant shareholder (our CEO Mr. Veloso and his family who now controls over 10 million of the 50.3 million shares outstanding or about 20% of the Company) would like to take the Company private. This would remove the annoying and distracting legally imposed fiduciary responsibilities that he currently carries to the other 80% owners of "his" Company, and would allow him and his new found partners to run the business as he sees fit without quarterly public scrutiny and the growing list of unanswered questions from impacted shareholders.
In the event a potential takeover deal for Verde is currently in the works, you might have the conditions in place that would encourage behaviours and reporting that are intended to reduce or dampen the current share price. Could that be what we are seeing today?
That being said, a takeover bid for Verde today would still require the majority of existing, independent shareholders to accept the offer in order that it be imposed on all shareholders as a fait accompli. My sense is that sufficient existing shareholders would be very hesitant to accept a bid priced below $5 per share. Mr Veloso himself has said he would not accept a current takeover offer at even $20 per share - the Company is just to valuable to let go at that price. He also recently agreed that the 750,000 10 year stock options issued to him on March 5, 2021 with a strike price of $1.22 would not be available to him until the Verde share price had risen to trade at or above $6.45 - the price investors paid to buy Verde shares at the last public float.
Would you sell your shares for $2 next week and believe you had made a wise choice?
All this is entirely speculation, but does go some way to answer DiggeDiego's insightful question.
Cheers,
S.