CTM1967 wrote: well here is an interesting theory on all that: *Disclaimer: this is only a theory. Nobody has any inside knowledge, and anyone claiming otherwise isn't being truthful. I’m posting this as a reference. If someone asks "Why does 90% matter? What do you mean CFIUS is volunatry?" etc, kindly direct them here. Please note this is not intended to be a discussion thread, and for that reason comments will be locked.
Viston wants to take Petroteq private. This isn’t opinion, it’s stated fact in their offer letter. As such, their goal is to obtain 90% of the outstanding shares (see pages 8 & 9). Why 90%? Because it is the easiest way accomplish their goal of privatizing. It CAN be done with 66.7%, but 90% is much easier and essentially takes all power away from minority shareholders.
How does this tie into the theory that CFIUS is a smokescreen? First, you must understand the CFIUS review is entirely voluntary, and probably not necessary. From page 54 of the offer letter:
Based upon a review of publicly available information relating to Petroteq’s business, the Offeror has not found anything to suggest that a filing with CFIUS is mandated. If the Offeror does determine that a filing with CFIUS is mandated, the Offeror will make a filing with CFIUS at least 30 days before the completion date of the transaction under 31 C.F.R. § 801.401. Even if the Offeror does not determine that a filing with CFIUS is mandated, the Offeror reserves the right to make a voluntary filing with CFIUS
There has been no RNS that I’m aware of stating that the CFIUS review has been mandated for this transaction. If I’m wrong, please post the link.
Next, page 4 clearly states that conditions of the offeror can be waived:
The Offer is conditional upon the specified conditions being satisfied, or where permitted, waived
This means the deal can close any time, today even, if Viston exercises its right to waive the condition of a CFIUS review, a condition that, as of now, is 100% VOLUNTARY.
Now, add up all of that and what you get is Viston using the CFIUS review to drag this out until they have 90%, at which point they will waive it and close immediately, as is their right to do per the offer. On Feb 24th they announced about 50% and a six-week delay. Six weeks later, they announce 78% and a two-month delay. Why is that 78% number so significant? Because anyone holding out for a better deal after closing got scared that Viston will hit 90% and leave them holding the bag. Petromod admitted this and changed his position from hold out to tender.
They could close the deal right now if they want by waiving the CFIUS review at 78%, so why don’t they? There are only two possible reasons:
-
They want to hold out until 90% for all the reasons outlined above
or
2. They are genuinely concerned about getting that clearance
I believe I can disprove number two instantly. If they’re worried about clearance from CFIUS, why have they not filed SIX months after taking the offer live? To this day they still have not submitted the filing! Their own PR release says they have only done the pre-filing. If this is a major concern, you do it on day one.
“Petroteq wouldn’t cooperate!” They don’t need Petroteq’s cooperation to do this filing. If they did, then any company could block a hostile-takeover by simply refusing to file paperwork. The fact is they could’ve had the CFIUS process completed by Feb 8th, the original takeover date. Yet, they hadn’t even pre-filed by that point, and then waited another two months to do so.
That’s the meat and potatoes, but there are other bits and pieces:
- In the release they say they will officially file CFIUS in late April or early May. Why wait ANOTHER 2-4 weeks to file? If they want this so badly and CFIUS is the final hurdle, then why are they dragging their feet like a child being told to brush their teeth? Because they’re lazy? Or is it because it’s easier to not file than pull the filing once it’s been delivered?
- Why did they wait until after the deadline to announce an extension, when they knew the entire time it would be required? I say it's because they didn't want people untendering
- On that note, go ask your broker to untender your shares and they’ll tell you the window is closed. When you tell them “No, the offer is extended” they will inform you they have not been made aware of that (I know this from experience). Now, obviously they’ll have to open the tender window back up if the offer is in fact extended to June 17th. But so far, brokerages have NOT been informed of that extension. Now, that could change today, tomorrow, whenever. But it’s also possible they’re delaying re-opening the window, while on the side, talking to a whale or two who maybe hasn't tendered yet. How do they know they haven’t tendered yet? Because they’ve been calling people every single day to ask. I myself have been contacted four times, and I’ve only got just over 1.2 million shares. Now imagine how many times they’ve called someone with 10, 20, 50 times that number.
Again, all theory. But circumstantial evidence is still evidence. In my opinion, the idea of CFIUS as a tool to bleed out the market makes a lot more sense than dragging out a voluntary filing for a penny stock, dealing in a technology that, while possibly game changing, hasn’t been proven to work on a commercial scale.
TL;DR – holding this up over a voluntary CFIUS review makes absolutely no sense…unless they are trying to exhaust/scare the retail market into giving up 90%, which was their stated goal from the beginning