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No dips?
How can the price dip? It is 'min out' at $0.0001. Unless someone places a trade directly through a trading desk, you can't place an order for less than $0.0001 through the automated trading systems.
Louis J. Desy Jr.
Expected/possible stock price for NewCo shares :: $3.98/share
The mid range in the POR was listed as $260 million. The company jsut registered $95 million of NewCo debt, leaving an expected market cap of $165 million. There are 41,412,961 common shares, so
(165,000,000 expected market cap / 41,412,961 common shares )
= $3.98 NewCo Common shares
When the Newco common starts trading, I expect it will start around $3.98/share.
Louis J. Desy Jr.
NewCo issues $95 million in debt
http://ih.advfn.com/p.php?pid=nmona&article=68988385
Small Company Offering and Sale of Securities Without Registration (d); for $95 million in NewCo debt.
Louis J. Desy Jr.
Expected strike price for NewCo warrants is $9.71
Now that we know the number of NewCo common shares, we can calculate the warrants strike price.
('Adjusted Equity Value' / Number of Newco common shares)
$402,000,000 / 41,412,961 = $9.71 expected strike price per warrant
Louis J. Desy Jr.
Newco Common Share, number is 41,412,961
You are correct, based upon the conversion factor, the number of common shares in NewCo will be 41,412,961
NewCo (reorg ANVGQ) Common shares is:
1: Number of ANVGQ 126,193,336
times warrants conversion factor of 0.05742988
2: Equals number of NewCo warrants of 7,247,268
3: Divided the number of warrants by 17.5% to get the total number of shares in the reformed company
( 7,247,268 / .175 ) = 41,412,961 NewCo common shares
Louis J. Desy Jr.
Date for change would be 'Effective Date' of plan
There is also a filing for the delisting of of the shares:
http://ih.advfn.com/p.php?pid=nmona&article=68987790
The date is not a set date, even by the court rules, and can be different in different districts. 'Effective Date' is not listed in the documents and is something that is determined by the court. If you look at all of the filings so far, you will only see the term 'Effective Date' without any set date listed.
See:
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0CCUQFjABahUKEwiVqfPi8tbIAhVP9IAKHf4pA9o&url=http%3A%2F%2Fwww.lexisnexis.com%2Fdocuments%2Fpdf%2F20080507045819_large.rtf&usg=AFQjCNF6mVkM2a5KlE9AiFhSfi6tO8uIRw&cad=rja
"Post Confirmation Issues: Ascertaining the Effective Date; Post-Confirmation Jurisdiction; Serial Filing; Post-Confirmation Litigation Vehicles"
I thought the appeal might have had a chance to delay the effective date. It is possible the appeal may have already been rejected by the BAP or the district court decided that the appeal should not delay the 'effective date'.
Louis J. Desy Jr.
Shareholders fighting back?
You are kidding me, right?
The shareholders have been pushing money onto the company for years!
"Its a gold mine, lets put all of our money into it, we will be rich!" - How did it turn out so far?
How else do you explain the $20 million in equity the company raised in December 2014, even though the stock was near $1 and off by something like over 80%?
My explanation, people, like you, thought it was a 'buying opportunity, and gladly lined up to give the company their money. I think some people even BORROWED money to be able to give it to the company.
Even now, some of you are shocked, shocked, that a company that has lost money for several quarters could be bankrupt and STILL do not believe it!
Absent a complete shutdown of operations and liquidation of the company, I do not think most of you will admit that MAYBE ANVGQ was not such a good investment, and realize that 'a little more time' is not going to help.
Louis J. Desy Jr.
They should have concentrated on the value of the mines
The opportunity, that was missed, is that they should have focused on getting the value of the mines recognized by the court. The problem with the valuation of over $1 billion, is that is based on a very low discount rate. The report only discounts the future values by 5%. A more realistic discount rate would have been in the area of 15%, but then the value of the mines would have dropped by 2/3rds.
Louis J. Desy Jr.
Warrants could have value if the stock price dropped
There is a possibility if the price of the current shares dropped by about 75% (to around $0.01), there is a profitable trade that could be made on the company stock being converted into warrants.
The problem with the appeal and the motions is that I do not think the people filing them have standing as a party to be making the motions. No amount of legal writing will get one over that problem.
I think the EC is the one that should be filing an appeal and possibly the only one that has standing as a party to file such a motion on behalf of the existing common shares. I do not think the EC would want to file an appeal, since they got the warrant percentage raised from 10% to 17.5%. While I do not expect the warrants to ever trade above the strike price, I do expect there to be a time premium value in the warrants. This would especially happen at the start when the warrants get issued. That would be the time, after the old common shares convert into the warrants, to sell them for a profit, but that can only happen if the shares can be bought low enough.
Pumping up the old common shares and keeping the stock price up, makes that impossible and only makes it so everyone 'loses a little more'.
Louis J. Desy Jr.
'Offer of Proof' for ANVGQ?
One thing that I have not seen are any motions to collect evidence of any illegal trading or activity relating to ANVGQ or its stock. None of the motions, that I have seen even seem to indicate what evidence people think exists that would demonstrate the illegal activity. A motion should have been filed asking to be allowed to show a 'Offer of Proof' (or at least mentioned in one of the motions) that would at least show the court where they think the evidence is and what they think it will show.
Louis J. Desy Jr.
Motions to reconsider, Document #1173 and #1174
Two motions for reconsideration were filed. I think it is a mistake trying to get the motions heard at the bankruptcy court since the appeal was filed for. In one of the motions, it is mentioned that 'To date no written order has been docketed with the court. . . ". It looks like they did not see the text in the confirmation order stating that 'all motions not already ruled are, overruled on the merits'.
There is also the civil procedure problem, in that if the appeal does go forward at the BAP, then any issues should be brought up in the brief at the appeals panel, not at the bankruptcy district court level.
Louis J. Desy Jr.
Motion to stay pending appeal was filed, Doc #1172
Tuttle did file a motion to stay the case while the appeal is being held, but I think there could be two problems with the motion.
Problem #1, 'who' is considered the entity or party as having filed the appeal:
The original appeal was filed and signed by Jordan Draga (pro se, I think); so the motion to stay the case pending the outcome of the appeal may need to be filed by that person also.
I do not think that Tuttle can file the motion to stay the case because he was not the one who filed and signed the appeal. While Tuttle is listed as one of the appellants in document #1163, Tuttle is not the one who filed document #1163, Jordan is. I think it would be better if Jordan also filed the motion to stay the case pending the outcome of the appeal and signed it.
Problem #2: Is the appellant listed in document #1163 and #1172 a valid appellant that has standing to file an appeal in the case?
The party is listed as the 'ad hoc committee of shareholders' that may not be a valid party to file an appeal in this case at this time. I think it would have been better if the individuals filed as a member of the existing shareholders class, individually, instead of trying to 'create a class or party'. There is already an equity committee that such a motion could have been filed through, if that party was going to be the existing common shares as a class.
Louis J. Desy Jr.
Special Interest
I am curious to see how long it is before the company files for a Chapter 7 liquidation.
I am amazed that the company is still able to operate with all of the payables it piles up.
Louis J. Desy Jr.
Effective Date could be as soon as today, Oct 21
The Effective date, referred to in the POR, could be any day now that the POR has been confirmed. While it is possible that Tuttle's appeal would/could delay the effective date, some sources indicate that a motion for a stay needs to be filed with the district bankruptcy court, which has not been done yet.
Since the confirming order was entered on Oct 20, the 'Effective Date' for the plan could be as soon as today, Oct 21.
One 'warning' that I would expect to see is a notice of the stock symbol change, since the ANVGQ shares would all get converted into warrants.
Louis J. Desy Jr
Example of buying 50,000 shares
I expect that 50,000 shares, costing $2,250 or more, will convert into 208 warrants. If the warrants trade at the low end for only $4/warrant, that would be $832, resulting in a loss of $1,418 on the trade.
Louis J. Desy Jr.
10Q report for period ending August 31, 2015
http://ih.advfn.com/p.php?pid=nmona&article=68954322
1: The company issued another 3.2 million common shares in the period plus another 26.5 million common shares after the end of the period.
"During the period, the holders of the convertible notes payable converted $7,500 of notes in exchange for 3,215,453 common shares."
My comments: In August 2015, the shares traded over $0.01 and in July even at $0.02; but even at $0.01 the shares could have been sold into the retail market for $32K, only 'paid' (Converted) $7,500, so they made more than $24K on the conversion.
"In September 2015, the holders of the convertible notes payable converted $35,400 of notes in exchange for 26,540,005 common shares."
2: The company had revenue of less than $4,000 for the quarter, but admin expenses of over $224K. It is beyond absurd.
Louis J. Desy Jr.
Operating Reports, August 2015, Document #1088
It looks like on average that the company is losing about $1 million per month. (August 2015 operating report).
Since the start of the bankruptcy, if the effects of the bankruptcy were taken out of the month reports, it looks like the company would have burned through about $46 million in cash.
Without the bankruptcy, the company would have gained $2 million from direct operations, not paid (gained) $13 million in professional fees plus another $1 million in other fees; but would not have received $60 million in DIP financing; so the net changed in cash without all of these items would have been $46 million less cash for the company.
I find find it amazing that even with the protection of bankruptcy, and not having to pay interest on the 2019 bonds, the company is still losing large amounts of cash each year.
Louis J. Desy Jr.
Three objections filed to Tuttle motions
Document #1168, Trustee objecting to Tuttle requesting reimbursement for expenses from company. The trustee says that Tuttle is not entitled to reimbursement from the company. I agree with the reasons the trustee puts forward in the motion.
Document #1167, Unsecured creditors (2019 Bonds) objecting to Tuttle requesting reimbursement for expenses and objecting to Tuttle's motion for standing to take depositions and other actions by Tuttle. This is the most important objection. If there was more money to be recovered or could be recovered from the company, the bond holders would want to do that instead of getting stock in NewCo. According to the expected value in NewCo of around $260 million, the bond holders are only looking at a recovery of far less than 50%. ( The $260 million amount would need to be reduced by the amount of debt that NewCo will have.)
Document #1166, debtors objecting to Tuttle's motions, same motions as Document #1167.
I did see that there is a BAP panel, and the record is being sent over there as part of the appeal process.
Louis J. Desy Jr.
Document #1163 - Notice of Appeal
In my opinion, it is a waste of money and time. I predict/expect that they will bring up the same points that have already been brought up and ruled on; and expect there will be more of the lack of legal writing in the appeal brief, as there were in all of the other motions.
One of the big problems with all of the motions, is the complete lack of any legal type or format in the briefs. The motions have all mainly been a 'statement of facts' without any kind of reference to the law or how the facts of the case apply to the law. Even if they did have something, they do not appear to have any ability to properly present it so that they would win a motion or appeal.
http://www.law.cuny.edu/legal-writing/students/irac-crracc/irac-crracc-1.html
A simple format for them to follow is known as IRAC; where
1: I - Issue - state the issue
2: R - Rule - state the rule
3: A - Apply - apply the rule to the issue
4: C - Conclusion - state why the court should come to your conclusion based on the issue and the rule as applied
It will also help if they try to sue the active voice for their verbs as much as possible.
I expect the brief will just be a long listing of facts without any application of law. Look at the other motions already filed, and compare it to their motions. You will be able to pick out each part, while their motions will have lots of facts or issues but lacking in rules or application (All I and C, no R or A)
Louis J. Desy Jr.
Possible value for warrants: $4 to $24 per warrant
http://www.hoadley.net/options/binomialtree.aspx?tree=B&warrant=Y
I used the following inputs for the expected warrants:
American style expiration (can be exercised at any time)
Strike price: $134
Underlying Asset prince ( $86, which is $260 million market cap / 3 million shares)
Days to expiration: 2,555 ( 7 years x 365 days/year)
dividend: Zero and zero days to ex dividend date
Volatility: 30%
Interest Rate: 5%
Using this set of values, I got a value of $24/warrant as the value. This value would go down over time as expiration got closer, but if 240 ANVGQ cost $10.80; and the inputs are correct and the one warrant will be worth $24; then there is a possible trade as long as the warrant is sold as soon as possible.
WARNING: If you try this trade, there are lots of variables that could make this a losing trade, the big inputs that could change the value of the warrant is the interest rate and volatility. When I redid the calculation with a volatility of only 10%, the value of the warrants dropped to $4/warrant, making the trade a losing trade. The problem is that we are trying to calculate the volatility for NewCo common shares, but the shares do not exist yet and there is no historical data to use to calculate the volatility from. (The existing ANVGQ would not be valid historical data to use in the warrants volatility calculation since that is for a company in bankruptcy.)
Louis J. Desy Jr.
Louis J. Desy Jr.
People caring about what is said.
I think that anyone who is thinking to buy the shares (or considering selling the shares) would want to have some idea if the shares have any value or not, plus what they can expect to happen in the remainder of the case. (i.e. Could the POR be appealed? If so, what would be the timeline to file such an appeal, after which the POR can not be appealed, etc.)
I not not telling anyone what to do, but I do think that anyone who ignore the conclusions I have come to, made based upon the facts, will end up losing money and even have the possibility of losing all of their investment.
Louis J. Desy Jr.
Deadline to appeal document #1136
I thought the deadline for filing an appeal of the plan of reorganization was 21 days, but I found a source that indicates the time to file may be as little as 10 days:
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=10&cad=rja&uact=8&ved=0CFkQFjAJahUKEwjB8IGkoNHIAhUW8mMKHaR3DRM&url=http%3A%2F%2Fwww.kirkland.com%2FsiteFiles%2Fkirkexp%2Fpublications%2F2330%2FDocument1%2FBankruptcy%2520Appeals.pdf&usg=AFQjCNEvJ3USavyAVPffn-PeqTB_gxRy7A
PDF from Kirkland and Ellis discussing the number of days to file an appeal of a bankruptcy court decision.
If the time is only ten days, then the time to file an appeal of the POR has passed. If it is not ten days, then the deadline looks like it would be 30 days.
Louis J. Desy Jr.
Bought another 50K shares?
Why on Earth would you buy more shares?
The POR was confirmed and the conversion of the shares to warrants will happened within a matter of weeks.
The POR documents already state that they believe the company value if $260 million and the 'Adjusted Equity Value' is $402 million, so at the start of NewCo, the warrants will only have a value for the time premium.
If anyone wanted to invest in the company, they would be better off selling ANVGQ for whatever they can get and then waiting until the POR is put into effect. Then look at the NewCo common or warrants to see how they compare, and which is better to buy.
Buying ANCGQ knowing that you are going to get converted into warrants at $10.80 per warrant is like buying a long dated call option that will be far out of the money. That is something that most people would not willingly or knowingly do with their money.
Louis J. Desy Jr.
Not given up hope?
I hate to be the bearer of bad news, and I hope you are kidding, but the old common shares are 'dead and buried'. That is why they stopped the trading on the RSHCQ in the middle of the trading day like they did. I do not not mean 'dead and buried' as an expression, I mean that in that the entity that issued the shares, no longer exists and the old common shares are now nothing. The only 'thing' left of the old company is its bankruptcy estate that will end once the case is over, but in any case the common shares no longer exist anymore.
Louis J. Desy Jr.
RSHCQ capital loss
At some point, I expect the brokerage firm will remove the shares from your account, and it should show up on the 1099-B form for tax year 2015 as a loss.
I think the process is that after the end of the tax year, at the latest, the brokerage firm will remove the shares from your account, and the 'closing out' of the position is recorded on the 1099-B form to you.
You should not need to do anything since it happened automatically as part of the shares being canceled and then delisted.
If you use any tax software, the transaction should automatically download into it.
Louis J. Desy Jr.
IF and WHEN the company can become profitable again
That is the problem. While I do not think management is that good, a large part of the problem was the big decline in gold prices after they tried to start the mine project.
If gold prices had jumped to $2,000; instead of dropping to $1,200, then management would have looked brilliant, since the company would have been making all kinds of money.
I think the problem is that with gold at $1,200 the mine simply can't operate at a profit.
The 'big tell' to me was when the company stopped mining, and even in bankruptcy still could not break even, even after the expenses of the bankruptcy filing is taken out of the monthly operating reports.
Depending on what happens in the next few months, I think it is possible for gold to drop into the range of $1,050. To me that would imply that no matter who is running the company, they should consider mothballing the entire operation until the price of gold recovers to at least $1,400 and there is a chance at operating at a profit.
Louis J. Desy Jr.
I see support at $0.0001!
Louis J. Desy Jr.
Why I post here?
You, and others, have already answered this question, several times, in your own way and in a manner to preserve what you think or choose to believe is, as how things are, in spite of facts presented to you.
You, and others, have all been presented with objective facts from several different sources and experts, all of which fit with the original expert analysis from a December 2014 report, a report that stated their target price was $0.05 for ANVGQ, and even that seems way too high now.
All of which was told to you for weeks on end, has come to pass, and yet you still refuse to open your eyes and see.
Louis J. Desy Jr.
What question?
You already 'knew' the answer, so I would contend that you really were not asking a question.
You should buy as much stock as possible, that way you will get lots and lots of warrants, that will expire worthless years from now, and even further reducing the net present value since any tax reduction will not be claimable until than since the position will not be closed out.
Louis J. Desy Jr.
I hope to stock up on worthless warrants
I did not want to say anything, but since you have 'called me out on it', my secret agenda is that I want to drive the stock price as low as possible, so I can stock up on warrants, that I believe, will never have any value.
While I did not state it in my recalculation on the existing common shares and warrants, my original posting on the NewCo warrants does have a last paragraph where I state that I believe that NewCo will never trade for 'Adjusted Equity Value' or higher; meaning the warrants will only have the time premium value to them, since I expect that the NewCo common will never trade over the strike price.
Louis J. Desy Jr.
It is over, Document #1136
Document #1136, Order Confirming Debtors Amended Plan:
https://cases.primeclerk.com/alliednevadagold/Home-DownloadPDF?id1=MjAzMjc1&id2=0
The court confirmed the plan. The order was signed by the judge on October 8, 2015. Within that order is a provision that all objections to the plan are overruled on the merits.
From page 6 of the PDF under the subheading 'Judicial Notice':
"All unresolved objections, statements, and reservation of rights , including the objections, are overruled on the merits."
With the entry of this order by the court, I am not even sure if the bankruptcy court would accept for filing any motion to object to the plan, since with this order any existing objections or future objections are overruled, plus the date to file objections is past. I expect that anyone trying to file an objection to the plan would have the filing rejected by the court clerk as being after the deadline for filing such objections.
Unfortunately, it is over. I expect that within a few weeks the plan will be done and the existing common shares will be converted into warrants.
Hopefully, the NewCo common shares will trade with a market value of at least $450 million or higher. Since there are a number of years for the warrants, there is time to make a profit on the trade.
Louis J. Desy Jr.
Wonder why people hang around?
I think part of the reason is that for many people, myself included, is that we never really though it (bankruptcy) could happen to Radio Shack, and even after the stock delisting, are still in shock at ‘how fast the end came’. I use to work for them part time, years ago (1980s and 1990s) and still had friends there right up until the end. In this last year, I went to visit some of them, January 2015, that I had not taken time to go see in years at their store, and to keep them informed of what was going on throughout the bankruptcy process, especially after their 'chain of command' started to break down as some managers, district managers and even regional managers were laid off without warning.
Back in the 1980s and 1990s, while the company did have its operating problems and did miss opportunities, the people that I talked with, and myself included, never really thought that the 'problems' would ever rise to the level of killing the entire company. We always though that the company would somehow always make enough money to always continue on, in spite of the mistakes that were made.
When I first started out there, early 1980s, everyone wanted to become a store manager. The only thing that you had to be able to do was to sell. If you could make the numbers, you could eventually get a store. After that, even in a small store, you could make $30K to $50K per year. (Would be like getting $60K to $100K today.) Even though you had to work at least 50 hours per week and all the hours during the holiday shopping season, as long as you did the numbers for sales, you were free to do what you wanted and left alone for the most part. (in later years this all changed as the pay scale went down and all kinds of metrics were constantly being pushed that ‘had to be meet’, such as extended warranty plans.) The prize was if you could move into one of the better stores. In the late 1980s, the top store in my district had the store manager making $75K/year salary plus another $75K as a bonus for the year; today that would be like making over $300K each year. There were a number of stores that had the manager making $60K to $80K per year; and that would be like making around $150K today. And this was for a job where the person didn't need years of college, or all kinds of credentials, they just needed to know the product and be able to sell.
One of the problems is that as time went on, the company ‘wandered’ from one thing to another, and also focused more on things like selling extended warranties instead of what the product was. At the first sign that a product line needed to change or be invested in, the company would starve it of funds, and as sales dropped in the product, drop it when they were no longer making any money on it. When I started there, the PC was just starting and they opened their computer centers. At first it was great, and many people got their first computer from Radio Shack, and they had a number of deals. One of my friends was the manager of a computer center that had a million dollar month due to the sale of a large order to a local school district. The problem is that the Radio Shack was usually at or near the highest price in its category. One of the exceptions was the Tandy 1000, which was PC Compatible and one of its biggest successes (I bought a Tandy 1000 in 1982 and it lasted for a number of years.). Then it was followed by the Tandy 2000, which was only partly compatible and ended up as the store computer for transmitting data to corporate. Eventually there was a Tandy 3000, which was PC Compatible but some of the lead was lost at that point. They had a number of innovative products and programs, like their own source version of RealWorld accounting ported to a Tandy 6000 multiuser system, running a version of Unix and FilePro database program. At the time, there was nothing comparable in that price range, but then over time they let these things and advantages slip away from them. Eventually the Tandy 6000 systems become replaced with systems running SCO Unix on a 286 or 386 at a much lower cost.
Even with all of the problems and missed opportunities, the company stock from the early 1980s to the late 1990s split a few times. One hundred shares in 1980, costing around $2,800 was worth something like over $70K at the height in the late 1990s. A store manager, who wisely saved his money and took part in the employee purchase program, could have a very good retirement if they were able to retire in the late 1990s. (And that was while still living what I would call an ‘upper middle class’ lifestyle. As an example, one of my friend’s had his own house, plus a house on a lake with a speedboat; and was planning on retiring to Aruba when he was 60. Unfortunately, he passed away within a year of his retirement but I am sure that his family will be ok financially and provided for from what he was able to save while working for the company.) There was still hope for the product line in the late 1990s/early 2000s. Cell phones were all over the place, and Radio Shack with its hundreds of locations could become the ‘go to’ place for cell phones, and later smart phones. Instead, the product line was ‘starved’ and employees where paid very little. As a result, any employee that had any product knowledge, left as soon as they were able to. I remember one telling story recounted to me one summer in the 2000s, where one of the employee remarked that they could make more money mowing lawns than working at the store that day! In past years, that would have never happened. I remember another coworker recounting to me how in the 1990s, he worked 20 hours per week at his store, and was making $30K per year, while still in college and not even working full time! (Plus he was able to sleep in most days and getting up for work did not interfere with going out at night since stores closed at 9:30pm and didn’t open until 10am. So, depending on your schedule, you could go to class or work late morning, all afternoon and into the early evening, and still have time to go out with friends or to parties until 2am and still get in a number of hours of sleep until you needed to get up the next day. And since the work of being a salesperson never required you to ‘take your work home with you’ there was never any problem about getting called in or having to work on work after hours.)
While many people use to think, ‘if the company keeps doing this (current bad practice) it is eventually going to kill the company; none of us ever though that could happen.
In the days leading up to the closing of my friends’ store, I use to run into old time customers of theirs and had the chance to talk with them for a while. Many of them seemed to miss a ‘company that no longer existed’ with all of the chances over the years and good people that had to go elsewhere in order to be able to make a living wage. At the end most managers were getting only around $40K, and that was at the best stores. Inventory and scheduling had been totally taken over by the computer system. Some stores were having trouble restocking batteries and running out of some kinds of batteries!
There was always some kind of inventory restrictions that got stricter and stricter as time went on. One of the stores I was at, the sales people were always amazed that the manager was able to have just enough of something that was selling so that they never missed a sale due to the store being out of stock. I remember a salesperson telling me that he would go back into the stock room not expecting to find the item that he just sold, and probably lose the sale as a result, but then, there would one of them be, right on the shelf!
At the end, in some places, it was almost like a flash back scene from ‘The Walking Dead’ showing how things went as ‘order broke down’; store shelves stripped down to nothing as though the place had been ransacked by looters, managers and salesmakers missing/laid off/fired, district managers and their assistants gone, even in some regions people could not get the regional manager on the phone, boxes arriving by UPS from a store that closed a few days prior to a store that was going to close that Saturday only to be informed that they were closing early on Thursday with no instructions on what to do with the 30+ boxes of inventory that had arrived from elsewhere
That is what I think is so shocking for many people, including myself. At the end, if there ever was an end, we expected it would be very orderly and everyone would have been informed, sort of comparable to order when the Shackleton Expedition had to abandonee their ship in the Antarctic (one scene from a TV series shows them washing the dishes and neatly restacking everything in the galley, even though it has been announced that is the last meal they are having on the ship and everyone is being urged to eat as much as possible since they can only take a limited amount of items with them onto the ice. As they are cleaning and putting the dishes away, one of the stewards asks why bother cleaning, since the ship is going to sink soon and the plates and such will all be lost, to the galley chief, who tells him that he never leaves or would leave the galley a mess).
Louis J. Desy Jr.
Why not just show your whole hand?
I expect because it would 'crater the price' if they just dumped a lot of shares on the market all at once. It is kind of hard to get anyone to bid up for anything if they see there is a whole lot of it for sale. I can't fault the firm for putting up blocks for sale with a little at a time, especially since they are supposed to be trying to get the best price for their customer.
Louis J. Desy Jr.
Update on 17.5% warrant valuation
Update on older posting for valuation of 17.5% warrants :
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=116399029
From the recent days, it looks like the company will have 3,000,000 shares of common in NewCo and the ‘Adjusted Equity Value’ will be $402 million. With those changes, here is an update to my older posting about the valuation of the warrants.
Document #864 gives the formula that will be used to set the strike price for the warrants. In general, the strike price will be set in a manner to allow all claims that are ahead of the existing common shares (DIP, Swap, Secured, old unsecured, new issued debt) to be made whole first. That is the ‘Adjusted Equity Value’ calculation that is referred to on page 11 of the PDF file.
The number of warrants will be 17.5% of the new common shares (Total Number of Shares).
As an example of what the strike would be:
A: Assumptions:
1: ‘Adjusted Equity Value’ is $402 million
2: ‘Total Share Number’ in Newco is 3 million common shares.
B: Warrant Strike Price Calculation
The formula is ‘Adjusted Equity Value’ divided by ‘Total Share Number’
402 / 3 is $134.00 as the strike price for the new warrants.
C: Calculated how many warrants the existing shares get
The calculation is 17.5% times Newco Shares so 3,000,000 x 17.5% = 525,000 warrants
To calculate how many warrants an existing shareholder gets, you also need to calculate the differences in Newco total shares and number of existing shares to get a ‘conversion factor’. If Newco will have 3 million shares, and the existing shares are 126 million, the calculation will be 3 / 126 or 0.02381. With the conversion factor, you multiply that times number of shares currently held times 17.5% to get the total number of new warrants in NewCo.
Examples of calculating number of warrants with different conversion factors for a person holding 100 shares of ANVGQ
Number of Newco Warrants = (number of Newco Shares / existing number of shares ) times (number of ANVGQ shares held) times 17.5%
Newco is expected to have 3 million shares.
( 3 / 126 ) * 100 shares * 17.5% = 0.416 warrants
In general, for every 240 existing shares of common, a person would get one warrant in Newco.
( 3 / 126 ) * 240 shares * 17.5% = 1 warrant in NewCo
D: Calculate the value of the warrants.
I will use the example were an existing 240 shares got issued 1 warrant.
The intra day price is $.045; so 240 shares will cost 240 * $0.045 or $10.80
The 240 shares will give one warrant. The warrant have a strike price of $134.00 so in order to convert the warrant, you will need $134.00 at conversion time (or sell it into the retail market.
The total cost of the one warrant converted into one Newco common is the $10.80 plus the $134.00 for a total of $144.80.
The value of the warrants after conversion depends on the market value of the company.
In this example, if the market value of the company is $402 million of less, the warrants will only have a time value, since the Newco shares will be below $134.00 strike price.
Value of warrants depending on market value of Newco Shares
E: Calculate the Newco Common share price
Market Cap / number of shares = Newco common share price
If Newco common trades for $434.4 million
434.4 / 3 = $144.80/share; warrants total cost is $144.80 so net is zero for 240 old shares; the trade breaks even.
If Newco common trades for $500 million
500 / 3 = $166/share; warrants total cost is $144.80 so net is $21.20 share for 240 old shares.
If Newco common trades for $800 million
800 / 3 = $266/share; warrants total cost $144.80 so net is $121.86/share on 240 old shares.
Louis J. Desy Jr.
Each 'deliverable' is for five shares
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CCwQFjACahUKEwjU7pex-sTIAhVIdR4KHafADIw&url=https%3A%2F%2Fwww.miaxoptions.com%2Fsites%2Fdefault%2Ffiles%2Falert-files%2FEOX_Split_36779.pdf&usg=AFQjCNEgyLEtj_r75IVK57o5OMIqxJHTDA&cad=rja
I just took another look at EOX options. The deliverable is for five shares on each contract, with each contract being 100 options, so a total of five hundred shares.
I took a look at buying some put options in 2016 (I am expecting the company to be bankruptcy by then), but they seem too expensive.
Louis J. Desy Jr.
Court case, anyone live nearby?
Does anyone live in the area where the court case is?
It would be interesting to see if the filings are the standard 'you owe use money' or if there is something substantive to them.
Louis J. Desy Jr.
Timeline for conversions
I expect the conversions to take place within a matter of weeks. Production is virtually dead.
With revenue of less than $2K for the an entire quarter, that is only $22 per day on average. The company is not even producing a barrel of oil per day! ( $2,000/90 day in quarter = $22; oil is at around $45/barrel, so they company is producing/pumping less than one barrel per day.)
The last 10Q report does not even show $2K of revenue for the entire quarter, and that is down from $6.3K in the prior year quarter. The decrease is larger than the drop in oil prices so it also implies that production is falling.
The preferred holders have to convert into common shares as fast as possible, since if production is falling, they run the risk of production ending up at or near zero. At that point it will be virtually impossible to get retail investors to buy the common shares being dumped onto the market, since with production at zero, it will become clear that something is wrong with the company.
Louis J. Desy Jr.
Not on the market.
just give them a little time. I expect we will see a whole series of 8K reports between now and the end of the year, and in each report hundreds of millions of shares will be issued, all of which will be promptly dumped into the retail market.
As an example, look at HDSI this year and you will see the same pattern, issued preferred/CD for almost no money, weekly 8K reports detailing the conversions, stock price craters due to overhang of hundreds of millions of shares; and then the stock stops trading at $0.0001 most days with no one buying.
Here FROT is at the point of about to issue the weekly 8K reports that will detail the conversions.
Louis J. Desy Jr.
4B common shares authorized is not high enough
The company will need over 5.7 billion shares if all of the preferred converts. The increase to 4 billion authorized is NOT enough!
Louis J. Desy Jr.
$0.385 BUY
350 shares at $0.0011?
Why would anyone bother to trade such a small amount of money?
Most brokers charge at least a few dollars for placing a trade, meaning the trade would not cover the commission.
Louis J. Desy Jr.