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There is a huge difference! "dormant", as you stated, indicates the potential for becoming active. That is not the case. I'm guessing that you missed the closure and full clearance announcement while you were away. No big deal, now you know.
Your wife thinks like mine. LOL!
I thought about it for more than a few seconds, let me change my prediction... Offor will take 98% of these shares. How did I conclude that?
Offor owns 43%, collectively we own less that 5%, let's say 4.3% to make the math easy. If we all own just 10% of what Offor does, and half of us don't participate, and only half of those that do over subscribe, then just 2.5% will be getting all they can, meaning Offor is getting 97.5%. Since the success of this offering requires two things, time and money... and those with time usually don't have money, I rounded up to 98%.
It'll probably be closer to 99%, even higher. The nut to crack is, how will the market react to Offor increasing his stake in this company to well over 50%?
The answer will come in the next few weeks. Will his controlling stake be met with optimism and boost the share price? Or will his controlling stake be met with fear and drive it lower?
My crystal ball is cloudy. I just don't know.
Krom, my take on this is the offer closes on the 31st. Then the bean counters will divy up the shares to all that fully subscribed. After that they will look at that subset and divy up the remaining shares pro rata based on the over subscription commitment each of the full participants made. If there are shares left after that, those that were fully allocated in round 2 and still have money left from their over subscription commitment will get more share based on how much that each have left.
In my gut I feel Offor fully participated and requested to buy ALL of the non-allocated shares by requesting all 150M+ shares potentially available (the original offering minus his ~100M shares that he fully committed to). As of January 31st this is a recursive math problem based on how much money each participant committed. It will take a matter of days, if not hours, to calculate who gets what. In the end I think Offor's deep pockets wills insure that he gets 80-90% of the ~248M offered.
My whole point being that after the 31st a calander doesn't set the subsequent round(s) schedule, a calculator and a small amount of time will. I have no doubt whatsoever that this was an exercise in Offor grabbing for as much as he can get, and doing it in a way that is legally bulletproof, we all had our chance. Crying foul that someone bought shares that you couldn't because he had the money and could simply isn't a legal defense that anyone would entertain. I think the outcome of this offering will be known within a week to 10 days.
Trade55, also watch your individual broker deadlines. Several people have posted that their brokers require that you fully fund your purchase and exercise your rights by COB tomorrow so that they have time to send the funds to the stock transfer agent etc.
Call your broker and ask them what you need to do. Assuming you have the funds in your account to cover your 33K shares at 7.5 cents, they should be able to take care of everything in that one call.
Hope this helps.
Why are you afraid? Park your cash until the fallout of your hypothetical scenario and buy more yourself if you are right. The only risks you face are:
1.) Not being about to get the shares you want without driving the price up yourself.
2.) Sinopec announcing JDZ phase 2 after...
3.) Total announcing success in JDZ block 1
4.) PSC partner in any of the STP EEZ blocks
5.) PSC partner in Chad and/or Kenya
6.) New property in Niger/elsewhere
7.5 cents is a steal if *any* of the above happen. If you are confident that *none* of the above will happen I cannot fathom why you wasted the time typing a post here.
Glad to hear that you incurred no fee's. That's awesome! As for Thuo, he is the head of what he was commissioned to be the head of, nothing more. Calling him a "CEO" fabricates the image that he is grossly overpaid and enjoying perks only reserved for the Gods.
He is an employee, albeit a highly paid one... not a CEO, and worth every dime he is paid.
The new subs are cheap to create. It's nothing more than filing a few documents. What new CEO's?
You are embellishing too much, IMO.
In fairness, ERHC has created new subsidiaries for each oil block it owns interest in. It has always done this. If one block comes up dry, that subsidiary can fold and there are no effects on the other subs/blocks.
It's a very common practice, and very rarely announced because it isn't a material event. Say ERHC had the rights to block "Booyah" in country ABC, and transfered those rights to subsidiary XYZ, which it wholly owns. Nothing has changed. ERHC still owns the rights. It's a paper change for accounting and legal purposes, nothing more.
That is a very exciting interview. Thanks.
Does Warren Buffet or any other investor with a reputation that can sway the market announce their intent to buy a stock prior to actually buying it? Of course not. Given Offor's position as largest shareholder any such announcement could be viewed as trying to manipulate the market. I certainly do not want to see any such allegations made.
Personally, I think he will buy his full allotment and all of the oversubscription he can get. When he does, there will be people that had the exact same opportunity to remain whole crying fowl that they were left out. Sometimes I think there are people that expect others to scratch off a winning lottery ticket, bury it in a mason jar, tell them that if they find it they can have it, and then tell them where it's buried!
In what universe does that thinking make sense?
Try buying 100's of 1000's of shares and see what happens. If even a half dozen people try that, the price would be higher in a flash. This offering gives people the ability to buy significant blocks all while removing the MM games that make that difficult on the open market.
I see the potential for JDZ news, EEZ partnership(s), equity partner(s), and uplisting to a major exchange, all before Chad and Kenya get off the ground.
To think that ERHC went through the AIM listing exercise and didn't come away with the knowledge of what they needed to do to get uplisted isn't logical. I'm sure that Strand Hanson made it very clear where they fell short and those ducks are quietly (very quietly, LOL) being put in a row.
Total will be revealling their JDZ plans soon and I think that will put a lot of paint on this canvas.
This is a very interesting time for all of us.
Is that the reality? What I see is ERHC wanting to move forward on multiple fronts simultaneously. To do that they'll need carries in all blocks. If they give up 60-70% in Kenya to move forward there, they will need to give up 60-70% in Chad, the EEZ, Niger(?), etc.
They have given no indication that they would move forward in Kennya and use the proceeds of any success to fund the others, quite the opposite. Using the farm-in for carry model would cost us all 70% of any upside. Going it alone is costing us 30% in this round. If interesting targets are identified, any future raises would be dilutive a mere fraction of that. We are all potentially much further ahead by going this route, especially those of us that can't commit more funds.
Make no mistake, this is Offor reaching for over 50% control, and doing it in a way that can never be challenged in court because we all had our chance to participate.
Here's a less verbose way of saying the same thing as the post I am replying to... Offor buying this entire offering is carrying you for a 30% diltution. ERHC won't get a full carry from any partner in any of its blocks for 30%, not even close.
Be thankful, there is no such thing as a free full carry.
I think it's carved in stone that full participation will occur and ERHC will raise the $18M or the offering never would have went forward. The only thing that remains to be seen is the retail crowds ability to "trust". If the retail crowd doesn't trust, they will not participate. If they don't participate, they get diluted significantly. When this is over, those that trust, and have the funds to commit, will remain whole. The rest will face dilution. We can't blame the company for that, they are giving us our chance to remain whole by participating on equal terms.
What I find puzzling is that some people would rather give away the majority of the Kenya block to gain a partner just so they don't have to pony up money to avoid being diluted. The amount of upside they would lose by giving away a huge chunk for full carry, in the event of a commercial discovery, FAR outweighs any effect of this dilution of equity.
They are diluting their own potential by demanding that they get less in the long run because they don't want to (or can't) commit more funds. How is that fair to investors that want to, and can, commit more funds? Why should those that can invest more be told "no, other shareholders want us to give away a massive part of our percentages because they can't or won't buy into the offering".
FWIW, I can't fully participate in all accounts, there's not even a close chance of that, but I think it's outrageous for some people to demand that those that can participate be denied that chance and diluted through giving up a huge percentage, only because those same some people don't want to (or can't) participate.
"If I can't participate then nobody can" is a very disturbing position I see being taken be some on this and other ERHE boards. It's not right.
The *only* thing we can count on is that whatever happens, it will be like everything else (good and bad) that has happened with this company, it will come out of left field and surprise us all.
That's the only constant I've noticed since my first first purchase nearly (gulp!) eight years ago.
That screen shot was helpful, thanks for posting it. It shows that a picture is worth a thousand clicks.
I suspect that the oversubscription "reward" for fully participating will work as follows... Don't laugh at the numbers, I am trying to keep the concept simple!
Oil Incorporated has 50 shareholders and does a rights offering for 1,000,000 shares. Five shareholders decide to fully participate. One large shareholder fully subscribes to the offering and takes 430K shares, which is their original percentage ownership of the company, so they remain undiluted under the new share structure. The remaining 4 shareholders each buy 10,000 shares representing their individual 1% ownership. So of the intitial 1M share offering, 5 shareholders bought 470K shares, leaving 530K shares for the oversubscription. The large shareholder bought 430K of the 470K sold, or 91.5%, while each of the other 4 shareholders bought 10K of the 470K, or about 2.125%. *If* the intent of each of these 5 shareholders is to maintain or gain ownership percentage via the offering, each will request the full 530K remaining shares. In that event the shares will be divided prorated on the percentage participation in round one.
The large shareholder will get 91.5% of her requested 530K, or 485K shares.
Each of the other 4 participants will get 2.125% of their requested 530K, or 11.25K shares.
That's how I understand this offering, and that's as easy as I can explain it. The only assumption I make is that all fully subscribing participants will attempt to max out their oversubscription. Any of them, from the large shareholder on down, may only choose to oversubscribe to a portion of the untaken shares due to personal financial limits, risk tolerence, etc., setting the stage for a third round. I don't think there will be a third round. The bottom line is if Offor has $18M he is willing to commit and the retail investors make a weak showing, Offor will get the vast majority of the new shares.
I posted clarification from Dan Keeney on that topic the other day. If you have shares in multiple accounts and fully subscribe in just one of those accounts, you will be able to oversubscribe in that account prorated based on your first round commitment.
Can someone please press 14?
Yes. If Offor bows out, lets say in the first round, then ALL of the shares on offer will get allocated to the participants fully subscribing prorated to their participation.
"100,000 additional rounds tells the tale" (I know that was hypotheical and exaggerated). I see this as a more democratic process, in line with the rest of the developed world.
Someone addresses a gathering of people and offers to sell a pizza that is cut into 100 pieces for $1 per piece (each piece representing a full participation in the offer). In that same announcement they state that anyone buying pieces can bid to buy any leftovers based on how many pieces they bought from the original offer.
That's how it has been done for dozens if not hundreds of years. Those who have the conviction of belief to "pony up" will be offered more. After that round, those that bought the second will be offered the third prorated on their percentage participation in the second.
Make no mistake, there is no catching up with Offor on this, in the end he will own a larger percentage, but I am *very* comfortable with how this is playing out.
I don't think that's the right conclusion. The way I read it is this... If I own 3 shares in account "A" and 6 shares in account "B", my rights are for 1 share in account "A" and 2 shares in account "B". If I only fund account "A" and purchase my 1 share, then I qualify to the oversubscription to the extent that I participated through that account.
In other words, if 100 investors fully subscribe in at least 1 account, those 100 investors will split the oversubscription based on their percentage buyin to the first offering.
In the first round we all have the option to buy 1 for every 3 owned, it is "prorated" based on each investors equity in the company. In the second round the oversubscription rights will be prorated based on each investors "equity" in the first offering.
If 100 investors fully participate, and Offor is one of them (he will be), then the other 99 investors will likely represent a fraction of a percent (combined) of the offering. They will be allowed to oversubscribe for that fraction of a percent of the oversubscription shares.
This is a tough thing to put into words! LOL!
From: Daniel Keeney, APR
Sent: Sunday, January 06, 2013 2:21 PM
To: 'Troy'
Subject: RE: Rights question
Troy:
Thanks for your note. Since the over-subscription rights will also be awarded on a ‘proportionate’ scale, it is my understanding that an investor with holdings in various different accounts would need to arrange to participate in an over-subscription in each account in order to participate to the maximum extent. You won’t be able to over-subscribe in one account for your proportionate share from other accounts, if that makes sense. But you aren’t under any obligation to participate in all your accounts, or any account for that matter.
Daniel Keeney, APR
DPK Public Relations
214.432.7556 (DFW)
832.467.2904 (Houston)
Web: www.dpkpr.com
Blog: www.danielkeeney.com
Twitter: @dpkpr
From: Troy
Sent: Saturday, January 05, 2013 2:47 PM
To: APR Daniel Keeney
Subject: Rights question
Hi Dan,
I have ERHE shares in multiple accounts. Do I have to fully subscribe in all accounts to participate in the oversubscription offer? Or can I participate in an oversubscription offer if I fully subscribe in at least one account?
It looks like I will be able to oversubscribe in my taxable account if I fully participate in that account, albeit only for an oversubscription proportionate to my participation in that account.
The last time this company bared it's soul and told the world of its intent, the "establishment" attempted to destroy it. It has taken years for ERHC to learn, and to recover, from the dirty smear campaign they were subjected to.
I question the logic behind anyone suggesting that they lay the playbook open again. I think they need to hold course and ignore the pressure to reveal their hand.
I think most investors see and understand what is happening.
s2r,
I apologize if I came across as condescending. I didn't mean it that way at all. This company has two basic choices, raise money or go out of business. They chose to raise money. They have only 3 ways to raise money. One is through debt, unfortunately the only entity that would ever consider loaning ERHC the money they need is Offor, who would require a boatload of shares as repayment for that loan. The retail crowd would be frozen out and have to endure significant dilution. The other two options involve issuing equity. They could do a private placement, but as we have seen in the past the terms can be toxic and detrimental to the share price. Even in this scenario the retail crowd is frozen out and has no choice but to endure the dilution and toxic effects of the placement. Lastly, they could do a rights offering to all shareholders giving each and every one a path to prevent dilution and do it with the same terms as any other participant. That's the path they chose.
They cannot give shares away to those who can't afford to participate... the whole idea behind doing this is to raise the capital they need. They are moving forward with the most shareholder friendly option they have available to them.
I gather from your post that you cannot afford to participate. I think many, if not most, are in the same boat. The point is that they made the option available. What would you have them do? They need money or it's lights out. Then we would have nothing.
I understand your frustration because I feel it as well, but to trash this plan when every other option is more damaging to us isn't helpful.
In a perfect world a farm-in partner would approach them flush with cash and offer a full carry agreement and allow them to keep more than a token percentage of their blocks, but this isn't a perfect world, that agreement hasn't materialized.
I'm sorry if I offended you, I didn't mean to.
I agree krom. We all have a decision to make, and we all will have to take ownership of the result of that decision. No company will tell you their stock is going to do this or that. That just won't happen.
There are no assurances that participating will benefit anyone, or that it won't. The irony is that most of those complaining the most about this were probably buying when ERHE was over 10 cents... but this offering at 7.5 cents is *bad* because another shareholder won't tell them what he is going to do.
Monetary gifts come from parents and grandparents when we are young, everything else has to be earned.
I don't think you understand, I'm not sure. You cannot sell your right to purchase at 7.5 cents. You can always sell, at any time, the shares that you purchase by executing your right to buy.
Yes he can tamtam...
You could be right. I have no idea how this is going to play out.
baz, think of it this way...
It's not about the initial offering, everyone has an equal chance to offset the dilution. It's about the oversubscription. If every single shareholder participates, everyone gets 1 for 3 and there is no oversubscription round. If only 20% of the retail shareholders participate, then the shares allocated for the 80% that didn't get put up in the oversubscription round and split among those that fully participated based on their equity percentage in the company. If the 20% of retailers that fully participated and oversubscribed represented 5% of the total full participation, with Offor representing the other 95%, then they would be allowed to buy 5% of the unsubscribed share and Offor the remaining 95%.
Round 1 allows us to buy a slice of the pie proportional to our equity in the company. Round two will allow round 1 participants to buy a slice of the remaining pie proportional to their participation in round 1.
I hope that I didn't make it worse. LOL!
I'd check with your broker on the timeframe required to exercise your rights if you are holding in street name. They may need a week or more to accept payment and notify the transfer agent, and send your payment. Waiting until the last minute may lock you out in the end.
Reading that made my eyes bleed. There is a LOT of information in that filing!
How can you use these two phrases in the same paragraph?
You will only know Offor committed AFTER the closing date. You will be out.
Why is this so hard for people to understand? That's not a shot at you in any way ajaxxx_99, I've just seen a lot of post from people waiting to see what Offor will do.
When that's made public it will be too late.
There is no "mopping up before the rest of the market hears". When the market hears it will be too late. If you didn't participate in the first offering, you are out of the loop for any unsubscribed shares. Only those that play in round one will be invited to round two.