American Creek Resources Ltd V.AMK

The REAL cost to AMK shareholders of a LOI termination

[rockport1]

In my opinion, this LOI offer from Cunningham Mining (CM) has effectively no cost to AMK shareholders whether it succeeds or not.  The LOI has already caused the share price to rise from 11.5 cents to where it is today, and has been as high as 25 cents. The volume was sufficient for most shareholders to exit at a price substantially higher than where it was prior to the offer.

However, the point of this post is to demonstrate the cost of the offer to AMK if the buyout is not completed for pre-existing shareholders.  

First, if CM does not raise sufficient funds or withdraws for any reason, AMK receives $115 k.  This should be sufficient to cover the legal and admin expenses of the offer.  This arguably wil leave AMK in a neutral financial position. The share share price will fall, but is likely to settle near the original 11.5 cents.  The increased market attention could mean a slightly elevated range.

In the interim before August 5, 2024, AMK is free to entertain any unsolicitated, superior offers to the CM LOI. They are only restricted from negotiating existing alternative offers, and intentionally soliiciting new offers.  Again, no real cost to AMK shareholders for the 60 day period.

Finally, should AMK receive and and consumate an alternative offer within 9 months of the LOI termination, there will be a $6.3 million compensation to CM.  Note, the compensation will effectively be borne by the acquiring company.  This again has no direct effect on AMK pre-existing shareholders. They will receive whatever the new offer is.  The payment to CM being common practice compensation for initiating a takeover battle. 

Do your DD folks.

[Jetstream1281]

Agree 100%

[Larry60]

No cost? You think costs have been $115k? By August, ill bet most the PP at 13 cents a unit is all gone on legals. You think AMK will  be able to collect $115k from Cunningham? Buyer pays the $7 Million?  Its $7 million less than what will go to shareholders aka 1.5 cents a share anyway you look at it. If the non deal just goes away, you dont think it will leave a stink behind? 

[rockport1]

Just a repost in cased you missed this earlier.  The board is so cluttered, many good points are getting lost.  See original post below.

[Larry60]

Rockport, if the deal does not happen, and i dont think it will, the cost, imho to AMK is: 1) Loss of credibility, 2)  Loss of reputation, 3) brings into question TC, 4) likely close to $1 million in legals and other costs, 5) upset shareholders, 6) potentially a $6.5 million payout to Cunningham if another deal happens 7) cost to all juniors who are tainted by such actions 8) unnecessary PP