RE:RE:Merger DD : Let's Talk About DilutionGrumpyInvestor wrote: On March 21st, SGNL announced that the Company had … « initiated a process with BMO Capital Markets as its financial advisor to evaluate potential strategic alternatives to advance the Goldboro Project … The strategic alternatives review could include, among other things, a joint venture transaction, a sale of the Company, the Project, or all the assets of the Company, a merger or other business combination, or another form of strategic transaction. »
That process was publicly announced and any interested party had all the time needed to show its interest, do its DD and make its pitch.
But now, according to various « back of the napkin » calculations, you FEEL that after going through that extensive seven month process with BMO and exploring every possible avenue going forward, management did not settle on the best deal they could for the shareholders. So, you want to turn down the deal they negociated, and somehow expect that same management to turn around and come up with a way better deal in a reasonable lapse of time.
I’m sure that if some other interested actor feels it has a better deal they are willing to offer, they will manifest themselves before we get to vote. Otherwise, it might be overly optimistic to hope that some white knight will come forward and offer a better deal after we have rejected this merger.
Well, it does not mean you should trust 100% those people. The deal has some nice angles to it, it's just that the balance is not fair at all. BMO could have said "Listen, merging with a company having about the same challenges and timelines than you could be a good thing. NEXG corresponds to that profile". BMO is not shareholder of the company and was there as a counselor. They certainly are not geologists neither. So are they the best to assess what Goldboro represents? I do not think so. So are they the best ones to assess if the 70%-30% is the best ratio we can obtain out of that merger? Well, looking at the market valuation (the numbers they will use), it looks like it is. So, I'm not trusting their approval about that ratio at all.
I've been invested in that company for 16 years now (formerly with Orex). Seeing them steal Goldboro so cheaply is not an option for me. I think the majority here thinks that we will not get a second offer and just accepted their fate. But hey, listen to that little voice saying "Jeeze... getting sold at 10 cents, diluted like hell at 8.7 cents and then diluted again as NEXG's shareholder might not be a FANTASTIK offer... unless you are a NEXG shareholder!".
Do you hear any negative comments on the NEXG board about that deal? No as they are so happy to steal us. And here, the vibe is "Well, what can you do about it", "They have Fank Giustra with them", "SGNL management thinks that it's the best they could do". "BMO must be the best one to decide our fate", etc.
I'm telling you: I rarely saw such an unfavorable deal being accepted by shareholders on the first offer! We deserve better. If we refuse it, we'll get another one. In business, it's commonly accepted that you always refuse the first offer. Wait for the second one.
Anyway, The BMO report will be distributed next week with the circular. I do not know the level of details that will be included in there but we might have some additional information.
GLTA