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Exercise Price of warrants
When I tried to exercise the warrants several weeks ago, it was at the then expected exercise price; so even though a warrant converts into 2 common shares, the exercise price does NOT need to be multiplied by 2; it is whatever the exercise price is set to.
Louis J. Desy Jr.
Cost of warrants
When I bought HYCTW, I was looking to get anything that would allow me to get the common shares, HYCT, so I could get a copy of the financial statements. The idea is that if I could get that then I could see if the common shares, HYCT, had any value of not.
In the end I ended up paying about $26 for 101 warrants, so my cost is arounf $0.25 per warrant; but I was more concerned with being able to by some number of warrants than buying at a good or rational price.
As I mentioned before, the fact that the warrants trade for a higher price than the common seems to indicate to me that either the warrants should trade much lower or the common shares, with the NewCo capital structure, may have been made almost worthless due to all kinds of other debt in line ahead of the HYCT shares. I suspect that even the DIP financing or new 2nd lien notes may never be able to get their cash out of HYCT unless gold price really spike, like to $3,000 or $4,000 per oz.
Louis J. Desy Jr.
Warrant exercise
I have the warrants in an account at TD Ameritrade.
My intention and expectation was that I was going to have to pay about $5.20 per warrant to exercise, and that was what I intended to do.
I did not try to do a cashless exercise but I can ask if it is possible and see what I get back.
Louis J. Desy Jr.
Tired to exercise a warrant
I sent a message to my broker last week asking to exercise a warrant. They sent back a form for me to sign and then noted all 101 warrants and being in process.
I only wanted to exercise one, at least until I could get a copy of the financial statements and see if it made sense or not.
My broker got a message back from the transfer agent that I couldn;t exercise them because they are 'out of the money' so nothing happened and I was unable to exchange any warrants for any common shares.
I was told that the $5.20 exercise price was not definite and still 'to be determined'.
Louis J. Desy Jr.
Shares that I own
I do have one common share in the DRS (Direct Registration System) so I show, under my own name, on the shareholder list. I also have several hundred shares in a brokerage account. As far as I can tell, the 52 week high for the common is $0.03 and the low $0.0011.
The way the common shares are trading, they are acting like the company is deep in the red; probably with the new financing from the reorg way ahead of the new common in any share of the profits.
I speculate that what may have happened is that when the bankruptcy started, they arranged for a bunch of DIP (debtor in Possession) financing, which would have a super priority in any recovery. Then as the bankruptcy went on, I remember there was one month that there was a large write off as the amount of gold recovered from the leech pads fell far short of what it was being carried on the books for. I think that may have left things with the NewCo way in the red when it reformed.
I hope if I can exercise one warrant, and then move that share to the DRS, that the company will allow me a set of financial statements and I can see how bad things with the new common.
Louis J. Desy Jr.
Warrants
If people were ever going to do anything with them, now would seem to be the time.
While I do expect it would cause problems if someone had many warrants, since exercising them would cost a bit of money; one could exercise one warrant, get the common shares, and then get a copy of the financials. Then you could see what value the common shares had and if exercising more warrants made sense or not.
My concern, without being able to look at the financial statements, is that the common trades more like an option than equity, making it look like the debt has all of the value in the company.
Louis J. Desy Jr.
Exercise of warrants
I sent a message to my broker asking them to check on exercising a warrant. Once I do that, I will move the two shares to the direct registration system and then hopefully will be able to get a set of financials.
My fear is that there is so much debt ahead of the common shares that the common shares are more like options and almost worthless; maybe things are so bad off that some of the debt holders are going to end up taking a loss on their loans in the end.
It is the only thing that makes sense as to why some of the HYCT common trades went off below a penny, assuming people at least too a look at the financial statements before they sold. This would also when HYCT trades in trades in such strange small amounts.
Louis J. Desy Jr.
About 6,500 shares traded today - Not a good sign
Unless the people selling have no idea or care what the shares are worth, I think this is a 'bad sign' that about 6,500 shares traded today.
My take on this is that the Hycroft Mining new common are so far underwater that the common shares are almost worthless.
If that is true, then the warrants are worse off, and I wonder if this financial engineering problem is so bad that some of the reformed company debt is in danger of not being repaid.
The other rational possibility is that the proposed business combination with MUDS looks like it is not going to take place, putting the HYCT common in danger.
Louis J. Desy Jr.
No Responses from the company (HAUP)
There is a currently ongoing case in Delaware to get financials statements. It was filed last year. The company never filed any response and did not even have a lawyer file an appearance in the case. Not having a lawyer at least file an appearance is somewhat unusual for a company that is still in operation.
Louis J. Desy Jr.
Thoughts on the new events with MUDS
It is clear that the merger is going to get done since it looks like a majority of the HYCT common is going to vote in favor of the purchase by MUDS.
I looked more at everything and here are my thoughts on it:
1: It looks like none of HYCT common traded after 12/27/2019; so it looks like people must have been selling to book the loss in 2019. I still have block on the bid, in case anything else shows up to be bought, but I am not expecting there to be anything else with the announcement of the purchase.
2: HYCT and HYCTW are 'still not trading right'. With the strike price of HYCTW around $8.40, HYCT should trade, if it trades at all, higher than $8.40 OR HYCTW should only trade for pennies, maybe even less depending on the Blakc-Sholes valuation of the warrants.
3: With the total value of the purchase being around $540 million, and MUDS owning 41% of the new entity, that would mean the existing Hycroft would be valued at 59% of that or around $318 million. The estimates of the value that Hycroft needs to be higher in order for the warrants to start to have value.
4: While I can't figure out how the HYCTW will be handled, I expect they must somehow be taken care of since they are part of the Hycroft. I do wish the company would issue a statement on this.
5: I am concerned in the whole 'financial engineering' aspect of the transaction. The mine is in operation and they do report producing gold, but no indication as to how much or what the financials are yet. The thing I do not like about the whole purchase are these multiple levels of borrowing, common and warrants with MUDS instead of just a straight purchase for cash and stock from MUDS.
6: While anyone who holds HYCT or HYCTW will probably want to hold onto them and see what the combination with MUDS brings, I think another way to play this is to buy the MUDS units, MUDSU symbol. The common is MUDS and trades for around $10.30. The units trade for around $10.90 and are one share of common plus one warrant that is good for five years with a strike price of $11.50. They also have a provision in that if the stock is $18 or higher for 20 days that they must be exercised or expire.
Louis J. Desy Jr.
Nothing from company.
I did put one share of HYCT into the DRS (Direct Registration System) so if they ever send out anything to shareholders, I will get it directly at my address.
BUT since I did that, I have heard nothing from the company.
Louis J. Desy Jr.
Clean shell
While it IS possible for this company to be sold as a clean shell, I do not think that is going to happen.
While people can look up more of the history of the company, here is a short summary of what I remember:
1: Company, Monarch Services, was a publishing company in the 1960s and a little earlier.
2: Company had a customer, Avalon Hill, that used it to print its boardgames, commonly known as wargames. Avalon Hill was run by a guy named Charles Roberts.
3: Avalon Hill ran into financial trouble and was unable to pay Monarch Services, so Monarch services took over Avalon Hill for the money owed. This was pre 1970.
4: Boardgames and wargames started to grow in popularity in the 1970s and 1980s. With that a large part of Monarch Services business became printing games for its Avalon Hill Division. Many games did very well and sold in excess of 100,000 copies.
5: At the height of wargamming it was estimated that 1% of the population had played a wargame. Of that amount the split seemed to be about 99% men and 1% women. The thinking on that split is that the games appealed to people who had an interest in politics, history and economics. There was also a heavy presence from various professions like computer science, e3nginering and government or military professionals.
6: Wargames and Board games declined in the 1990s and 2000s due to the rise of role playing games, computer games and the internet.
7: During the 1970s and 1980s the company did well, and I think, even at one point paid a dividend for several years.
8: In the 1990s the company started to have problems as computer games gained market share. While the company had several computer game programs that were very good, it was not enough to offset the decline in overall game sales. The company did try some games aimed at the popular market but those only had limited success and were not enough to offset the losses in other areas.
In the good times the decision on a print run for a game was if they should do a run of 5,000 copies or 10,000 copies. In later years, late 1990s, according to what I could tell, no wargame company was doing print runs of more than 3,000 copies and even those were taking time to sell out. There are even some reports of some companies in the 2000s doing wargame print runs of as little as 250 copies of a game.
9: The company also tried to expand into other areas. They had a Boys Life magazine, I think also published Girls Life, a Tobacco shop, a line of plush toys for infants; but none of these areas worked. At best the efforts broke even and at worst added to the losses.
10: In 1998, without any warning, the company sold off its entire game line and IP to Hasboro for something like $8 million around August 1998. The flagship magazine, The General, stopped publication. While Monarch Avalon still existed, it now was nothing but a shell with a pile of cash and no debt.
11: Shareholders expected and hopped for a distribution of the profits from the sales of Avalon Hill and its IP, but management decided instead to try a few more business lines. The company bought 18 acres in a county near Baltimore to run catered events, like birthday parties and weddings. As it turned out, there was not really enough demand and the company lost money every quarter.
12: Around this time, 2000 or 2003 or so, and for a few years, there was a proxy fight with a guy named A J Sutton. He and a few other shareholders tried to get the company to pay out some/most of the cash instead of losing money on trying a new business. They were not able to win because the officers had 30% of the shares and able to retain control.
13: Finally, the company and officers decided to pay a liquidating dividend of $0.62 per share. That took place on March 2, 2010.
https://www.sec.gov/Archives/edgar/data/202685/000020268510000002/aoy.txt
The company also filed to de register and stop filing reports with the SEC.
At that point I thought the company was dead, but its corporate charter was kept going. But in 2016 it was admin dissolved so it looks like the company was finally gone BUT with the company filing to revive the corporate charter yesterday, the company is in existence but it looks like there are no operations and no assets.
While the company is a 'clean shell' it looks like there is no interest of them wanting to sell it to anyone. While in theory someone could buy a majority of the shares and force that, that would probably take a lot of time and money to do. So I can't see that would be worth it, plus even if it worked it could take years to do.
Louis J. Desy Jr.
Float for MAHI
1: AS I recall from the past years, and I have followed MAHI since the 1980s, is the company had 1.6 million shares outstanding with 30% held by the founder and his son. The father, Eric Dott, passed away in 2016 so I am going to guess that all of the 30% shares with officers are held by the son now.
2: While it does look like the company filed for reinstatement, I do not think anything else will be going on. I also notice that the company stopped filing annual reports and then did an administrative dissolve around the same time as Eric Dott passed away (at age 89) so I am going to guess there was some 'disruption' with filing the annual report while the estate was being settled.
3: While the company charter does appear to be properly filed now and annual reports being brought current, I do not think there are any assets or operations anymore and am not even sure why the stock still trades.
Louis J. Desy Jr.
Seems strange
Seems strange that anyone would file to revive the company. I am not even sure the Dotts (father and son who where officers of the company and owned about 30% of the shares) are still around or not anymore. I talked with the son a few times back in 2007 when they still owned the 18 acres but didn't see what could be done with it except maybe selling it off as three house lots. As it turned out, the land eventually was sold to the county for about $500K and then later the company paid a liquidating dividend.
Louis J. Desy Jr.
Common shares and warrants
I got 101 warrants but there is no way to exercise them at the moment. Officaially, while there is the expected exercise price of $8.40 per warrant, there is nothing offical.
I hold one common as direct registration with the transfer agent and the other 141 shares in a broker account under a 'street name'. (Shares held at a broker account are all usually all pooled together and registered under the broker; this type of registration is called a 'street name registration'.
The one thing I find complexing is that I can't figure out how or why these shares are coming from. I expect it has to be some of the pre reorg bond holders that were issued shares and must be selling the shares to take the loss on 2019 taxes; otherwise I can't see why anyone would sell shares in such unusual lot sizes. Also am not sure how I am even able to place an order and get it filled. The first time it happened I was confused as to what I was seeing and it took a few weeks that I even noticed HYCT in my positions list.
Louis J. Desy Jr.
Something is wrong with the price of the common and warrants
There is something wrong with how the common and the warrants are trading. No matter what is going on, the warrants should always trade for less than the common shares; but instead we find the warrants are trading in the range of $0.05 to $0.10 while the common shares trade around $0.01 to $0.02.
The warrants have a limited time to exercise with an exercise price that will be somewhere around $8.40; so either the warrants are trading way too high or the common shares are being sold off way too low. Even with all of the common share restrictions, the common should trade higher than the warrants price.
Louis J. Desy Jr.
I was able to buy more HYCT.
As shocked as I am, somehow I was able to get more shares; I got another 141 shares, so someone else got the remaining 22 shares that traded yesterday.
I have the 141 shares sitting in my broker account under a street name and one share transferred to direct registration with the transfer agent.
No word from the company but what I hope for is that when (if?) they send out any notices or statements to the shareholders listed with the transfer agent that I will get it also since now the one share is held directly in my name.
I tried to get a feel for valuing the common shares and it looks like about $200 million in two kinds of debt are ahead of the common shares as far sharing in any profits on the mines.
I have also considered that maybe I could file a request in Delaware district court a request to get a copy of the financial statements since it is close enough that I can drive there within a morning if I leave my area by 4am or 5am.
Louis J. Desy Jr.
BKKN registration revoke? They must have really made someone mad
I am surprised that they actually got their registration revoked. I know three other companies, no assets, no operations, no reports and even at least one with no corporate charter that are still trading.
BDGR - At least five years no reports and main stockholder went to jail for tax evasion
OOAG - Majority shareholder in jail, corporate charter expired no reports
MAHI - Did an orderly shutdow, paid a liquidating dividend, corporate charter expired; but shares still trade even though now about a decade or so.
Louis J. Desy Jr.
Company lawsuits
I see the company lost with employment contract lawsuit for about $775K but the guy settled for like $100K; probably because he feared the company was never going to be able to pay.
Plus the XA lawsuit only resulted in something like $570K and probably nothing else is going to get paid. I seem to recall people were talking like the XA lawsuit was going to get the company $20 million or something.
I also see out good buddy, Vikram Grover, on the filing!
I am sure with all the 'good work' he did with SirenGPS that the stock will skyrocket!
Louis J. Desy Jr.
Allied Nevada/Hycroft Mining message boards
I have had problems following the changes in the message boards. Typically, it seems to be the Investorshub standard that when there is some kind of change in the stock symbol or a reorg in chapter 11, that the existing board will be closed/deleted and a new board available (if there is a new common shares.)
I expect that some of the problem investorshub has is that they don't want to keep old message boards around for companies that are gone in order to save on hard disk space and other computer resources.
As an example, the old Radio Shack message board for RSHCQ, once the reorg plan was confirmed and the time period ran on the 8 or 10 days for any appeals, the court entered the plan as being effective, the stock exchanged cancelled the common shares and the stock stop trading. At the end of that day investorshub delete the old message board and it was simply gone.
Allied, under ANVGQ, seems to have had the message board reset and all of the prior messages deleted but a new message board allowed; plus there is the message board here for the HYCT common shares.
I suspect that once HYCT starts trading normally that there will be a new board setup for it.
I think part of the reason investorshub does what it does is as a safety to make sure that people do not get confused as to what shares the board is linked to and to save on hard disk space and server resources.
What would be better if there was some way to migrate the pre reorg message board into the new one and maybe have a marker on message warning people that some posts were pre reorg so people will be aware that any presentation of numbers for financials or value estimates have probably changed by the reorg plan and people would need to look at that to make sure that are dealing with the best sources of information.
Louis J. Desy Jr.
HYCT trading 'grey market' and direct registration
I know people are amazed, and even I was when I first realized the trade had taken place. It went off on 10/30/2019 and I did not notice for a few weeks. When I would glance at my positions I must have thought or confused it with HYCTW, the warrants.
I got a message from the broker that the share has been submitted for direct registration and will take 3 to 5 days. Once that happens, and I find out who the transfer agent is, I will be able to ask more questions about the 'grey market' and exactly how the shares are trading.
One question I do have and do not remember from prior, were there any retail market holders of the bonds? I assume that shares that are trading are those people that got HYCT when the company reorganized, since I can't make any senses as to what the HYCT are trading in such strange blocks; otcmarkets.com shows something like a few trades of 131 shares, which I can't see if it was something like a large holder of the bonds pre filing.
One of the problems with trading HYCT is that the online system does not show any bid/ask and the price $0/$0 on both and that usually creates all kinds of problems putting in an order, and then getting the order to ever go through.
Louis J. Desy Jr.
I am not a hedge fund manager.
I think that the condition of the company is such that I really can't see any hedge fund out or even be allowed to be interested.
MAYBE private equity might be willing to 'take a flyer' on this but the terms would have to be so bad that can't believe the company would agree to them; like giving up large percentages of ownership for just about nothing.
The big gain or play here is the price of gold. With the federal reserve pumping all kinds of money into the system it is amazing that the price of gold is only around $1,500/oz.
Louis J. Desy Jr.
I have been talking with Tracy Thom
I have been talking with her over the past few days. I expect it will take a while for the company to decide what to do, since even I am surprised and not entirely clear how I was even able to get an order filled through a retail broker.
At the moment their position is that the seller was supposed to get company approval before offering the share to anyone else. My position is that I assume they did or the company did not respond within the timeline so that I do have a valid share.
One of the suggestions I made is that since I have an order to buy a block of common shares on what I think should be the best offer to buy, I expect any other such shares that I will get when they show up on the ask. For whatever reason it does look like every once in a while several hundred shares will trade on HYCT.
I suggested on solution is that the company agree I am allowed to hold shares and I could 'collect up' any shares that get out into the retail market, so over time as I bought from other sellers the number of shareholders would become lower.
I do expect that no matter what happens the company will probably become a full reporting company since in order to stay in business they will need to begin regular operations plus need access to the financial markets.
One other point is that when they time comes it will be in the company's best interest to get the value of the common shares, HYCT, as high as possible, since then the warrants will have value and get exercised. 12 million warrants at an exercise price of $8.40 would give the company a little over $84 million in capital and more than enough to fund some kind of operations.
Louis J. Desy Jr.
Took a starter?
The company has been gone for about a decade now. Even the corporate charter was dissolved after the company paid out a liquidating dividend in the 2000s.
Why would you 'take a starter' in a company that is gone?
Louis J. Desy Jr.
This is still trading?
Did someone actually file to dissolve this or what that another company?
Louis J. Desy Jr.
Going no bid at $0.0001?
Anyone want to take a guess when GMER goes no bid at $0.0001?
One has to wonder at how Vik can't seem to get anything going when the stock market is soaring.
I mean, usually even 'problem companies' have the best time to be able to issue all kinds of shares onto the retail muppets.
Louis J. Desy Jr.
Is this things still limping along?
Did they ever start reporting again?
Louis J. Desy Jr.
Additional strange share transactions
As a follow on my last message, I have also seen some other strange transactions take place over the last few years on some stocks, like HYCT, SGER and OOAG. OOAG is basically a company that has nothing left and not filed reports in years but somehow the shares still trade. HYCT is supposed to be under all kinds of common share ownership restrictions but somehow I was able to get a common share. SGER is still in existence and annual reports are available from the company if you email them, so once in a while I did some transactions and the 'additional strange share transactions' are what I am going to relate to you.
Normally, in a stock with the on line system, there will be a bid price and number of shares for someone looking to buy, and also an ask price and number of shares for someone looking to sell. As an example, the HYCTW warrants will have a bid/ask of sometime like $0.05 for 10,000 warrants and ask of $0.10 for 10,000 warrants. The 'way to read this' is that the best offer to buy is 10,000 warrants at $0.05 per warrant and the best offer to sell is for 10,000 warrants at $0.10. When someone on the sell side lowers their price down to the bid, or someone on the bid side raises their price up to the ask, then they have hit the bid (or ask) and a transaction will take place at or near that price or better. Now, if you do not have level II access, or the stock does not have that level of trading available, we only get to see the best buy and sell prices and not anything beyond that. In most stocks, there will be level II quotes available and if you have access to that, you can see all of the other buy and sell orders prices and number of shares.
In a case of something like HYCTW with low volume and low number of units (shares or warrants) traded the market maker will usually step in an offer a block on the bid and ask of 10,000 so there is a market for someone in the retail market to work with. In the case of SGER, as an example, if you see 10,000 shares on the bid or ask, it will usually mean there are no other orders and the market maker is putting that there for trading, and the spread will be 100% between the bid and ask (ex: biud of $0.03 will have an ask of $0.06). One way to 'test' if the bid or ask is the market maker is to put out an order for more shares and see if the block increases by your order or if the block becomes your order. As an example, if I see SGER has 10,000 shares on the bid and another 10,000 on the ask and the prices are $0.05/$0.10; then it may be the market maker. I can test this by putting in an order to buy 11,000 shares at $0.05 and watch what happens to the bid. If the bid changes to 11,000 shares at $0.05 then I know it is me and only me that is the best offer to buy. Once in a while you can also, walk the bid down a little by entering lower bid prices and watching to see if you are still the best offer to buy or not. Eventually, when the price is deemed 'too low' the market maker will step back in and become the best offer to buy price again.
The 'very strange' things I have seen a few times is than I cancelled my order that was on the bid and it got filled at once, plus the price fell a lot for a few seconds. In theory this should not happen and I wondered if there was something wrong with the online system since the shares only trade once in a while and I could not see why or even how a retail trader would decide to sell to me at the bid just as I went to cancel my order.
I have also seen some people trying to tick a stock price up for the day and arrange to put in a buy at the ask at something like 3:59:45, meaning there would be no time for a transaction to go off on the ask. One time in another stock I was having some fun and telling people that I was going to crash the shares at the close (not hard to do since the company was virtually dead and had not filed reports in a few years and was surprised it was even trading) with something like a sell of 50,000 shares at $0.0008 or so and was shocked that I ran up against someone else trying to tick up the stock for the day with an order for like 100,000 into the last minute and having them throw an absolute fit when a second order of mine hit the bid and low for the day. The next day whoever was trying to 'paint the tape' and make it look like the stock was going up put in a but order for so many shares that it was not worth it to do my practical joke of hitting the bid in the last moment of the trading day. I also question why in the world someone would want to spend that kind of money since with my 'joke block' I was probably losing $20 ( 50,000 bought at $0.0008 and sold for $0.0004) doing it but the other person was starting to lost more than that trying to back stock a dead stock and doing it every day to make things look better than they were.
Louis J. Desy Jr.
One share transactions
I have seen on other stocks one share transactions go off, with me being on the buying end and wondering 'what was going on and why would anyone do such a transaction'.
The rational and logical reason would be the buyer had a sell order in that was being filled and I caught the last one share sold in the sell order. Highly unlikely since my buy order would have to be in just the right place in the order queue and there also would just happen to be one share left over on the sell order.
The other reason for a 'one share transaction' to get executed is that someone is testing to see if there are any other orders not showing between the bid and ask that is showing on the online retail systems. I have seen this happen a few times, the most recent that comes to memory were stock OOAG and SGER, where a one share order was execute. With HYCT I do not think that is likely since HYCT does not seem to show and big or ask prices to the retail online system or even the share blocks on the bid or ask; so running the one share test would tell someone nothing about what was going for pricing. I also wonder how the seller of my one share of HYCT avoided the share certificate restrictions on transfers, unless they were presented to the company and the company declined to purchase or simply forgot to do so within the time limits.
In any case, it will be interesting to see if I can get to see a set of company financials and if I will have to change the ownership from street name to direct ownership with the transfer agent. I hope that will not be needed since I expect it will be somewhat of a chore to get to the right people at TD Ameritrade to get that done. In 'the old days' I would have just requested a paper stock certificate to be issued to me, which would have been by default in my name, but I think paper stock certificates are no longer an available for most companies.
Louis J. Desy Jr.
Broker used
I used TD Ameritrade. HYCT is listed as 'grey market' so there is no bid/ask that shows on the automated system like with other stocks or the warrants under HYCTW.
I even had problems putting in the order since the price lists at $0.0000, most systems will give a warning that the price you are entering is far from the last price so I had to start the bid at $0.0001 and raise it from there in 0.0001 increments. Eventually it let me raise the price to $10 for one share and I left the order there for a while.
Somehow, the order went off on 10/30/2019 at $0.011. I was so not expecting the order to ever get filled that I did not notice for a few weeks and was sort of dazed when I finally realized HYCT was part of the positions list ojn the account.
Now, while it is good that apparently it is possible for the retail market for get HYCT shares, I do consider it a 'not good sign' that the trade went off at such a low price since it may mean that even though old debt holder got most of the NewCo common shares in the reorg that the value of the NewCo common is being 'swampped' by the debt on the balance sheet.
Hopefully, if (when?) there is a large raise with the price of gold, the debt covered, then the extra will all show up in common.
Louis J. Desy Jr.
I was able to buy a share of HYCT!
I am not exactly sure how or why, but I was able to get one share of the common, HYCT, through my broker. The trade went off at $0.011 on October 30, 2019. I did get charged trading fees of about $6.95 so it was asomewhat expensive share. OTCMarkets.com reports that a few hundred shares traded that day.
I did apply to get a set of the financial statements, but there are questions as to how the shares need to be held so the company can verify that I am the owner. I sent the company a copy of my trade confirmation. If that is not good enough then I am going to see about changing how the share is held from street name to direct registration with the transfer agent.
Louis J. Desy Jr.
No, you misunderstand.
The 17.5% was just used to calculate how many common shares the new company should have, and it was set so the warrants would be 17.5% of that.
IF the warrants are exercised, and exchanged for common shares, then you would pay the exercise price, $8.40, per warrant that is converted into a common share. This is called 'exercising the warrants'. You pay $8.40 per warrant, and get that many common shares.
This only makes sense if the common shares are about $8.40 because if the common shares are trading for less than $8.40 then you would just buy them on the open market.
There is an exception to this, and it is unusual due to the situation surrounding the company. Since only common shareholders are allowed to get a set of financial statements, some people, myself included, would be willing to exercise a warrant even if the common shares were value far below $8.40 per share. That is because it may be the only way at this time to get a share of the common, and then be able to get a copy of the financial statements.
Louis J. Desy Jr.
17.5% what it means
The 17.5% was part of the calculation to determine how many warrants the old common shareholders should get. That calculation was that with the reformed company there would be enough warrants so if all of them were exercised that the old shareholders would have 17.5% of the reorganized company; the only problem is that the common share price needs to get up to $8.40 or higher for this to work.
Louis J. Desy Jr.
The value of the warrants.
This is the simple way to understand a warrant.
A warrant is the right to buy a share of common stock at the exercise price. In this case, it looks like the exercise (or strike) price will be $8.40 so; if I 'turn in' a warrant plus pay $8.40 you get a share of common stock.
(one Warrant + paying $8.40 gets you a common share of stock )
So, if the price per common share is below $8.40, the warrants have little value since if someone wanted to buy a common share, it would cost less to just buy the common share and not use the warrant.
If the price or value of the common shares are higher than the warrant exercise price, then the warrant is 'worth' the difference between the common share price and the warrant exercise price. As an example, assume the common shares are worth $10. The exercise price of the w )arrant $8.40, so the warrant itself is now worth $1.60 ($10 - $8.40 = $1.60 and people would be willing to pay as much as $1.60 to buy a warrant, that they then could pay the exercise price of $8.40 and exchange the warrant for a share of common.
That is the simple way to value a warrant. There is also a more complicated formula that takes into account the volatility (how much the price of a stock changes) of a stock and time left to expire.
( Warrant price calculator https://www.asx.com.au/prices/theoretical_price_calculators.htm )
In my estimates, if there are around 75 million shares of common, plus another 17.5% for warrants to be exercise, the total shares outstanding would end up around 100 million shares. So if the common shares are around $8.40, we are looking or hope for a company value of around $840 million or so. This is assuming my estimate of the number of common shares is correct.
we would also need to add the value of the debt if we were looking at the total company value.
Now some people have come across total project net present values as high as 1.5 billion; so if the price of gold goes up, then the warrant should have some value.
In addition, I do believe there is a possibility of hyperinflation in the United States, in which case the value of the project should go far beyond what anyone had thought or hoped for. In a hyperinflation situation while the price of gold will rise, what is really happening is that the value of the USD is falling, but it 'shows up' as the price of gold rising.
Louis J. Desy Jr.
1.75? I think you mean 17.5%
As part of the reorg plan, the existing common shares were to be issued warrants convertible into 17.5% of the outstanding common shares with a strike price calculated. From what people can tel, it looks like the strike price should be $8.40.
The problem with this, is that it looks like if the warrants were to be exercised that the outstanding number of shares would be somewhere around 100 million shares and a strike price of $8.40 would give it a value of over $800 million. While my numbers are only an estimate, it does show that the company has to have a somewhat high market cap in order for the warrants to have any value.
Note this does not take into account the debt the reformed company has, so the whole company would have to be worth that much more in order for the warrants to have any value.
The big hope I see for the warrants is if there was finally a large rise in the price of gold with all of the money that the Fed has been pumping into the financial systems.
Louis J. Desy Jr.
I agree - HYCTW strike should be $8.40
From the papers and filings I came across, it does look like the warrants were proposed to be 17.5% of the outstanding shares and a strike price of $8.40. While the 17.5% is definite, since that was part of the restructuring plan, the strike price can only be inferred from the formula presented in the plan.
The warrants would be eligible for exercise in the event of the 'special event' or public listing of the company.
At the moment, I think the best outcome would be a large rise in the price of gold, $1,800 to $2,000 per oz, and the company wanted to restart operations and/or has a partner to get going again.
Louis J. Desy Jr.
Recent HYCT common trades - not me
I do have an order in for some shares at $1/share BUT it is not showing on the automated systems at all. This is an inprovment from my earlier attempts since I had to start entering the order at $0.0001 and raise it from there. the trading system would give me a warning that my bid price was too far away from the last price and reject the order.
I do hold 101 warrants and tried to exercise one of them to get a common shares, but was told there are no terms by my broker so I can't exercise any at the moment.
Unless someone is willing to pass around a set of financials I do not see how any of us will be able to get a share of the common so we can look at the financials and see what is going on with the company.
Louis J. Desy Jr.
Black Swan event
While I did buy some GLD and GOLD calls, with the expectation and fear that there will be a currency crisis and debt crisis, I did not expect an oil crisis of this scale. If the facilities are really so damaged that 5 million barrels of production are going to be off line for weeks or months, it will be a disaster. There is also the problem in that if one strike could do this much damage, then all of Saudi Arabia's production of something on the order of 10 million barrels per day is at risk.
While Russia will benefit from a rise in oil prices, China will certainly not benefit from any of this.
Louis J. Desy Jr.
Gold prices moving up
I am not wanting gold prices to move up due to a general war breaking out in the Middle East. There are plenty of reasons for gold to move up from all of the money being pumped into the economy worldwide plus the US spending an extra trillion per year that it has to borrow before it can spend it as the country edges closer each day to a debt crisis and currency crisis.
Prior to this not many people seemed to care and/or be aware of the war between Saudi Arabia and Yemen. Our failure in not getting our ally in the region, Saudi Arabia, to stop this war, or at least agree to a cease fire and negotiations, now has resulted in the other side landing a devastating blow on them with this strike on oil refineries. This could tip world economies into recession, and may even end up with a ground invasion of US ground forces into Iran at some point if they are blamed for the attacks. Of course, Saudi Arabia may retaliate against Iran on its own if they think Iran is responsible for the attacks and have a general war going on in the entire region.
Louis J. Desy Jr.
Gold may move higher on the Saudi oil refinery attacks
Depending on how bad the attacks on the refinery are, and who was responsible, it is possible that gold may move higher on the fall out from the attacks.
I an order for some out of the money call options on USO at the open tomorrow. I already have some far out of the money call options on GLD and GOLD (Barrack) prior to this 'just in case something happens'.
If there is a general panic in the market tomorrow, depending on the news as to how bad the situation is I expect:
1: Oil to move up which will cause
2: market to drop and gold/silver to rise
What happens next will depend on:
1: How bad the damage is from the prior attacks.
2: Is Iran involved; if yes, does the US strike back? Maybe within a matter of weeks there is a full scale ground invasion, which would spike gold.
Louis J. Desy Jr.