American Creek Resources Ltd V.AMK

Costs

[Larry60]

In the circulare AMK says costs are epected to be around $2.5 million.  If the deal closes, Cunninghsam effectively pays those costs.  But if the deal does not close, the ciruclar warns, then AMK will bare those costs!!!!!

Even worse, the 50% of the measly $300k has to be returned to Cunninghsam in the event the deal deal does not close for any reason!!!!!  PP at 9 cents to fund it???????????????

"Failure to Complete the Arrangement IN THE EVENT THE ARRANGEMENT RESOLUTION IS NOT PASSED BY SHAREHOLDERS OR THE COURT DOES NOT APPROVE THE ARRANGEMENT OR THE ARRANGEMENT DOES NOT PROCEED FOR SOME OTHER REASON, AMERICAN CREEK WILL CARRY ON BUSINESS AS IT IS CURRENTLY CARRYING ON, AND AMERICAN CREEK WILL INCUR THE EXPENSES RELATED TO THE PLAN OF ARRANGEMENT. Note, however, that the Signing Fee ($300,000) is permitted to be used by the Company for working capital purposes in the Ordinary Course of Business (including reasonable expenses incurred by the Company related to the Arrangement) and the Company will retain 50% of the Signing Fee ($150,000) in the event that the Arrangement does not proceed.

[SilverSam]

While it is true that the company seems to be taking on most of the risk should the deal not go through, one can also interpret it as management being confident in everything falling into place and as such, being willing to take on the disproportionate risk as described in the circulare.

[cskhurasu]

Or you can take it that management and insiders are so desperate for a big payday that they are willing to risk the company and its other shareholders. 

[Larry60]

CSK, for a deal like this, youd usually see a minimum depostit of $10 to $20 million.  BUt in this case, after giving Cunningham months to try to rasie money, AMK agreed to a $0.3  million deposit AND gave CUnningh a month to pay.  Even then, Cunnnigham scrabled and while they paid the measley $300k, it was late (thats why its not in AMK 09/30 stataemtents)! TO claim that AMK