Post by
BSdetector2016 on Jun 15, 2019 8:30am
Let's do some math
Sangha, Rosseau and Chamandy control 254,986,872 shares out of 639,841,422 issued and outstanding. That's 39.85% right there, and they need 66.66% for the consolidation proposal to pass. Other large shareholders have probably been contacted for their blessing. The bottom line is EVERYONE needs to vote to shoot this down.
Management argues that it will "increase liquidity". How on earth will that happen when the shares do not trade now with a 640M share count? Consolidated 1 for 20 the total share count will be 31,992,071 as per the circular. Assuming that the major shareholders (SRC) continue to sit on their shares, as they do now, that will mean a minimum of 12,749,344 shares PERMANENTLY out of circulation. Only 19,242,727 shares will theoretically be available to be "liquid". Of that total, other large shareholders will be sitting on their shares too, thus considerably reducing liquidity. The shares simply won't trade.
The large shareholders want to be able to margin their shares. What is unspoken, but always happens after a devastating consolidation, is a new financing. So yes, CGP won't stay at a ~32M share count for very long because management's likely STEP #2 is more DILUTION.
Cut expenses to a minimum (yes, let people go), wait and play the long game. The other way just screws the vast majority of shareholders. These shareholders need to VOTE.
Comment by
FoolAndHisMoney on Jun 15, 2019 10:08am
Correct. They need 2/3 of those who vote to be in favour for it to pass. However there are other shareholders that you’ve not listed who are on side with the consolidation and collectively they are closer to 59% in favour. So personally I think this is a done deal as typically only about 60% of shareholders vote in junior company annual meetings.
Comment by
BSdetector2016 on Jun 15, 2019 10:48am
That's what I meant about "other large shareholders". They will destroy value with this stunt, especially after the financing is announced. Too bad junior companies rarely do the right thing - like cut expenses to the bone and wait. Instead they treat the market as a well for salaries and perks.
Comment by
FoolAndHisMoney on Jun 15, 2019 10:55am
I think that the best we can hope for is that things will play out the way Chris Temple said in his write up. If it happens that way then all will be ok as long as Ecuador gets its act together. Cornerstone is one of the strongest juniors corporately and they have access to $$ as needed. Brooke is very responsible and I know he is running things on lean.
Comment by
BSdetector2016 on Jun 15, 2019 11:12am
They are not running lean by any means; if you look at the Summary Compensation Table you will note that four (4) individuals burned through close to 1 million dollars last year basically waiting for the phone to ring. That amount is pure cash. The other officers are below $150K so they don't get reported.