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Good question 2hars...
...why wasn't a Schedule 13D filed by someone holding 471 million shares (over 20%)?
Who owns the 471 million shares?
If Mehle Douglas owns 173,300,000 shares, who owns the 471 million shares?
Specifically:
Question (1) who legally controls pgpm (i.e., who owns the majority of shares) - us (the misfits) and other outsiders, or r.p. and the former management? i.e., who do you ultimately answer to?
Matt O'Bryant answer: "The majority of shares are held by one person 471,000,000. I know who it is and given cash flow I can buy this person out. It's not RP!"
Then this person must be an insider, otherwise, the following cannot be true!
Matt O'Bryant answer: "Public float is 400 to 500 million shares.
I would have to re-review to get an exact number.
I believe its around 470,000,000.
Not sure how many total shares among the misfits."
I'm not sure what you are asking. eom.
Well, OK, here's an example of what makes this so difficult.
Matt Quote:
"Initial Offer (Draft) from Arcland Energy Corporation:
557,783 Shares Preferred (note interest + small portion principal) + $2,400,000 Cash by July 31st 2012 Convertible to 8,924,528 Shares Common ACLY!"
Questions:
Does this mean the preferred shares are given NOW, and the cash is not received until 7/31/2012?
Or, does it mean both the preferred shares and cash are not given to PGPM until 7/31/2012?
And there is no mention of whether the shares are passed through to PGPM stockholders, or retained by PGPM. Or, if the preferred shares will be non-restricted or not, or subject to a LATER conversion date.
I already asked the question about whether these 9 million shares will be part of a larger pool (note: recapitalization = dilution), thereby rendering them worth less.
All of these questions could have been answered, if the statement was written properly. I think its deliberate.
Maybe here is something we could do with Dr. Doug's info:
Dallas66 sent us this - Bylaws of Pilgrim Petroleum:
"SECTION 2. Special Meetings. Special meetings of the Shareholders, for any purpose or purposes, may be called by the Board of Directors, by the holders of not less than one-tenth (1/10) of all the shares of the Corporation entitled to vote at the meeting, or by the President of the Corporation."
Not sure of all requirements, but this seems to indicate shareholders having a total of 116 million non-restricted shares can call a special meeting. At least we could find out what else is required, if anything...
iambrok, I am the last to...
...tell you, of all people, otherwise. You have been on this board for several years, and suffered this $%@& PGPM stock more than most of us. So, I understand. Truly!
I'm considering this - if ACLY gives the preferred shares portion of the "initial offer," to PGPM (or 557,783 pfd. shares); and IF O'Bryant passes those shares on to PGPM shareholders; and IF there are no restrictions (holding period, etc.), and those shares, according to O'Bryant, can be converted to 8,924,528 common shares of ACLY.
So, if someone bought 1,000,000 PGPM shares for 0.0004/sh., that would cost $400 plus $9 commission = $409.
For $409, you would get 1,000,000 PGPM shares and approximately 484 shares of ACLY pfd, which is convertible to 7,744 shares of ACLY common (based on the number of shares currently outstanding - this may be different in actuality, as conversion can be predicated on some other basis). Note that ACLY currently sells for $0.15/sh.
And, 7,744 shares ACLY x 15 cents = $1,161.
And you would still have the 1,000,000 shares of PGPM.
(I'M NOT SURE MY MATH ABOVE IS CORRECT, JUST ESTIMATING!).
LOL, I know that is a lot of IFs. Especially considering this Company's bad history involving investors. And it may well be not worth the drama, and trauma, to go through any more grief with this bunch. So, these are just some things I'm considering as well. GLTY.
That's way too kind,
but appreciated, as are your board comments. We must never forget that we are minority shareholders, and Matt's first allegiance is to the majority. That means the insiders, including the Chairman, his boss, and himself.
It amazes me that with only 27 days left for ACLY to finalize their financing arrangement (per the LOI), and considering ACLY must have in place an acceptable "buyoff" arrangement with PGPM, that Matt wrote he is taking a family vacation this week. That means there will be 15 business days left, when he returns, to wrap up this loose end involving PGPM. It should have already been done, and maybe it has, with Matt's comments to us regarding the "initial ACLY offer" just more window-dressing.
Think about it, who made this offer and presented it to Matt? Did Ralph come to him and say, "here it is, go sell it to the misfits." That would be "instructions," not an "offer."
And you know...
ACLY might not succeed with this Russian venture, either now or later. So many real risks. And this offer from ACLY is heavily dependent on the Russian venture succeeding. It may well explain why the cash is promised in 14 months and not now. If the venture does not succeed, ACLY stock will be below its current $0.15/sh price AND there won't be any cash for PGPM. PGPM's other 20% (10%?) holdings of ACLY will be similarly devalued.
But the stockholders of PGPM, of course, want PGPM to succeed.
PGPM needs an income stream. PGPM, according to O'Bryant, couldn't even get back the lease properties, if able to, unless ACLY corrects their condition.
ACLY broke the terms of the asset acquisition (they didn't pay!), so PGPM is entitled to all the properties back. So, why not counteroffer that PGPM needs to get back a few of the lease properties, now, in appropriate condition at ACLY's expense and fully ready for the technology to make them productive. Cherry-pick the ones O'Bryant thinks he can make the most profitable. That way, PGPM can have a future, albeit smaller, irrespective of the success or failure of this Russian gamble. PGPM is holding some trump cards, but only now in the pre-financing stage. PGPM needs to play the hand it has now.
Further...
...just what was/is the value of the leases stolen from us?
(1) Was there an income stream, before the leases were allowed to become environmental liabilities?
(2) Just how much potential income did PGPM forgo when ACLY took these properties?
(3) Was an independent apprasial made now, for the preferred shares plus cash, or did ACLY board just come up with a figure they think PGPM might be dumb enough to accept, without questioning it.
If, repeat if, ACLY cannot advance on their financing with the Swiss group, then they desparately need to settle this. Make a counteroffer, based on $10 million and the market value of ACLY shares.
Valuing this...
Given from Matt: "557,783 Shares Preferred (note interest + small portion principal) + $2,400,000 Cash by July 31st 2012
Convertible to 8,924,528 Shares Common ACLY!"
Then:
ACLY is pricing our former assets, as follows:
8,924,528 ACLY shares x $0.15 = $1,338,679.
Plus $2,400,000 = $3,738,679.
(Note: the underlining security prices the convertible security. Also, pricing is not by book value!).
That $3.7 million is a future value, which should be discounted to determine its present value, both securities and cash. So, the real value of this deal is less than $3.7 million. And, what interest will the preferred shares pay?
OK, sounds mighty fine, but...
(1)...how many shares of ACLY will there be if they "recapitalize?" (in other words, these shares would be diluted). Or, are they intending to NOT add ACLY shares? or, will there be a capitalized affiliate for the Russian venture (with its own shares instead), or both?
(2) You indicate this only affects the "note." Does Pilgrim currently own 10% of ACLY's common stock, and does American Petroleum currently own 10% of ACLY's common stock?
If one or both is true, why not pass these new ACLY convertible preferred shares on to PGPM shareholders?
(3) Could you clarify what this means: "Pushing for Board position ACLY to monitor Pilgrim's investment." If PGPM owns 20% of ACLY, why insn't there representation now? Or, do you mean YOU want to sit on ACLY's board? (which should have happened before).
And more to do...
So, ACLY now only needs:
* To clean up its theft of PGPM/affiliate's oil leases and other assets;
* Become current on its financial statements;
* Pass an audit;
* Recapitalize ACLY;
* Possibly initiate a new corporate affiliate for the Russian venture;
* Complete its complicated foreign financing arrangements by June 5, 2011; and
* Get the compliance response letter from the prior audit firm.
Of course, the winter sets in quickly in Russia, hence the need to promptly get production facilities/infrastructure started in June/July. This may be demanded by the outside investors.
LOL, good one!
And here's the interesting part in the new ACLY 8-K:
"On April 11, 2011, the Audit Committee of the Company provide Whitley Penn with a copy of this disclosure set forth under this Item 4.01 and requested that Whitley Penn furnish a letter ("Response Letter") addressed to the Securities & Exchange Commission stating whether or not it agrees with the above statements. Since the date of this request, the Company's president and CFO have made repeated attempts to communicate with Whitley Penn in order to obtain a copy of the Response Letter. As of the date of this filing, Whitley Penn has failed to provide a copy of the Response Letter to the Company. Accordingly, in an effort to remain compliant, the Company is filing this disclosure without the Response Letter as an attached exhibit. Company's CFO will be sending a letter to Whitley Penn making a follow-up request for the Response Letter. Immediately upon the Company's receipt of a copy of the Response Letter, the Company will amend this 8-K filing with the Response Letter attached thereto."
Isn't this almost 4 weeks ago? Maybe they've escaped to Mexico! Kind of a reverse migration...
So, ACLY now only needs:
* To clean up its theft of PGPM/affiliate's oil leases and other assets;
* Become current on its financial statements;
* Pass an audit;
* Complete its complicated foreign financing arrangements by June 5, 2011; and
* Get the above letter from the prior audit firm.
Of course, the winter sets in quickly in ole' Russia, hence the need to promptly get production facilities up and running in June/July.
ACLY management - a well "oiled" machine... (Oops!)
LOL, no problemo!
About what Matt said: "I have been informed that ACLY must settle its obligation to PGPM in order to complete an ACLY audit and to secure an ACLY underwriter for the Kumskaya Neft acquisiton."
This is in effect a gift to PGPM stockholders/interests, but not surprising. The unnamed investors/lenders are assuming huge risks, not just in dealing with a small, unknown firm in Arcland Energy Corp, but in where/how/when the funds are to be employed (Russia). Having every filing and documentation cleaned up, before lenders/investors finalize their substantial financial commitment, makes perfect sense.
I'll bet Ralph thought he could blow this "PGPM thing" off, or paper over it, or provide some token offer, and was stunned to find out he HAS to formally commit to fix it fully before he gets the Francs. If he stays consistent, the offer won't be very good in our eyes. But then, again, he has a timing problem, too. Its now pretty late in this LOI/financing game. And then there are those pesky accountants - just looking to make trouble! LOL, Sweet!
Huh?
"ACLY Settlement."
Matt: "I have been informed that ACLY must settle its obligation to PGPM in order to complete an ACLY audit and to secure an ACLY underwriter for the Kumskaya Neft acquisiton."
Good, only this leverage is helping us. ACLY must, repeat MUST, provide adequate compensation for its existing obligations to PGPM, or go pound salt.
Matt: "Please understand that there are severe tax implications to PGPM with the settlement of ACLY's financial obligations to the company."
Why? We don't have any significant current revenue. Can't pay tax without an income stream! Hey, you don't have to accept a one-time distribution. And remember, the leases MUST be made whole by ACLY, before we can get them back, according to what you have said.
Matt: "The only non-taxable event to PGPM would be the acquisition of shares of ACLY that are then distributed as a dividend to PGPM shareholders."
And?
Matt: "My preference is to accept a combination of cash and stock; however, ACLY at this time lacks the funds to provide cash to PGPM due to funding being needed to finalize the Kumskaya Neft acquisition."
Please! ACLY will be paying out $50,000 to $100,000 or more up-front for the kind of accounting work they've just contracted for, just to bring their financials up to date. Add in other contract costs, meetings, travel, etc. and ACLY is currently shelling out hundreds of thousands. But they have ZERO money for us? Please stop with the insults.
Matt: "This solution could ultimately result in continued cashflow problems for PGPM."
Please! Say to ACLY, "make whole the condition of the leases and return these properties - NOW - or forget your Russian deal." Found some funds for the accounting costs didn't they, don't let them "play poor."
Matt: "I am awaiting formal documentation as to the ACLY conversion rate with interest and the tax implications associated with the settlement."
What in hell does this mean?
Matt: "Please understand that it is my duty as an officer and shareholder of PGPM to negotiate the best financial outcome for PGPM and its shareholders."
Good, that's what we shareholders have been writing about for months. Newsflash! So do the all the directors of PGPM, including those bunnies having dual hats, who let our leases/properties deteriorate. Does "self-dealing" mean anything to any of these folks?
Since PGPM already owns 20% of ACLY...
...that would make sense. However, if ACLY actually pulls this off, there won't be a revenue stream for some unknown amount of time (because of set-up, fixed costs, paying Russkies, etc.). And that revenue would be captured entirely within the "wholly-owned subsidiary of the Company (call it the Swiss Company)."
Which means they (ALCY) doesn't have to distribute it as dividends, or whatever, but can retain it, in whole or in part. In fact, the terms of the lending arrangement will determine what happens to the revenues.
Our hope is in any appreciated value of ACLY stock. And in the return of our deteriorated leases, which Matt can possibly make productive.
Of course if PGPM is paid in more stock of ACLY that would add to the 20% already owned. It would be nice if PGPM distributed those shares to its stockholders, but given the history here, I wouldn't count on it!
If this "little legal matter" involving ALCY's compensation for PGPM's leases didn't have to be resolved as demanded by some third parties, Ralph would not be doing anything. The insiders of both companies think only of themselves - first and foremost. We are misfits...
I wrote them a letter...
...phone calls get "lost," LOL. I put a lot of detail in my letter, others don't have to. But a "reminder" from interested parties (and that certainly includes stockholders of BOTH companies) does help bring specific transactions more attention. Really, it does.
E.g., I mentioned that there is no known independent evaluations or legal opinions of the values involved in the property "acquisitions" and/or the resulting note settlement. The fact that PGPM and ACLY personnel that made these decisions are insiders of both firms is a big red flag to auditors/accountants.
And, while financing is being sought for this Russian exploration and production "thing," it is a good time to have accountants asking questions, (before certifying anything!).
Please write them, more is better.
You can do more than just "see"...
Quote: "like to see how they get around that"
Send a letter to:
M&K, CPAS, PLLC
13831 Northwest Freeway Suite 575
Houston, Texas 77040
832-242-9950
And identify yourself as a shareholder of Arcland Energy Corp., and that there was an exchange of oil properties between it and a related company, Pilgrim Petroleum, AND
that you want a full review performed of this transaction(s) with appropriate corrective actions to be taken. Please add you have been informed by the President of PGPM that the properties have been allowed (by ACLY) to deteriorate. You can be non-specific, the duty to be specific remains with the accountants!
These are the new ACLY accountants, and they are preparing financial statements for 2008, 2009, and 2010, which hopefully covers the time period in question.
I may be reading it differently than you guys...
...but this was stated in the March 15, 2011 8-K:
"Upon the Closing, the Kumskaya Neft project shall become a wholly-owned subsidiary of the Company."
So, a new stock offering not affecting ACLY common stock? Perhaps with a new class of securities for control (e.g., preferred stock). Maybe this is what you are, in fact, already saying...
Absolutely.
With Arcland's management "annexing" (my term!) PGPM's primary assets, the oil properties, in large part PGPM only has PROSPECTIVE auxiliary services left with which to generate revenues.
Need ACLY to become the "deep pockets!"
OK...
...thanks for gracious private message. Most on PGPM board hoping best for ACLY. Since there is really nothing else left in near-term. I think Ralph has placed himself in an indefensible position, and needs to get out of PGPM, if only for his best legal interests!
And Part 2...
...is a question below.
Given that:
1 The Chairman and board directors of PGPM directed the transfer of PGPM's assets to ACLY; and
2 Those assets were permitted to deteriorate in contravention of the terms of the contract; and
3 PGPM, neglecting its fiduciary responsibilities, has made no formal attempt to take back those same assets, also in contravention of the terms of the contract; and
4 The Chairman of ACLY, and its senior officers, are insiders to both PGPM and ACLY, and the same folks RE-VALUED those subject assets to the betterment of ACLY and at the expense of PGPM; then
Question: What do you think a lawyer - representing PGPM's shareholders - could do with this information in a legal suit?
Ah, let's review...
Part 1 - Have you seen this? Q and A answered by PGPM President Matt O'Bryant (earlier this year):
PGPM's properties:
Q: IF we were to re-acquire the leases...how responisble would it be to keep them and invest for a viable return...or possibly dangle them on the end of a stick and see what kind of offers from a "real" company might come in?
O'Bryant Answer: "No company wants to touch the leases or the wells. Trust me, I've tried that angle for months. It is all a big headache to a company looking to expand. Hence the reason a $40 million booked asset was originally only worth $10mm on the street. Now, That $10mm street value is reduced down (due to ACLY neglect, fines + plugging) to more like $2.5mm."
Q: Based on the "original" Pinedo valuation of $40 million value, it appears we sacrificed 75% of the "value" for a $10 mil note.
O'Bryant Answer: "It's worse than that. See above."
(sic) ACLY's wells:
Q: "The plugged ACLY wells...are they our original wells?
O'Bryant Answer: "Yes, almost all have been plugged due to ACLY neglect. I've toured the leases myself. Very few wells still exist!!! Also, very little hope for my technology to be applied with no existing shallow wells."
Q: If we take back the leases....who is responsible for the fines?
O'Bryant Answer: "Fines are ACLY/RP's problem. However, NO leases can transfer ownership either back to PGPM or others until fines and lease cleanup has been resolved."
Easy junior.
1 Bud fox hates us (PGPM) as much as you.
2 We WERE owed $40 million.
3 And just when have you "bailed us out?"
We THINK PGPM owns 10% of Arcland directly, and another 10% through its wholly-owned affiliate. You are welcome to correct us on these items when you have actually done your DD.
90 days is actually June 5.
The LOI duration is specific to the number of days total - 90. That would be June 5. And since June 5 falls on a Sunday, then June 3 (Friday) is the last business day. Doubt this will be decided, good or bad, on the last day anyway, but nice knowing.
Anyone else having trouble getting registered into PGPM Data Room?
Would like Matt to answer (officially):
1 How many shares does ACLY have outstanding? (several on here insist its more than the 5 million+ showing on Pink Sheets).
2 How many shares does PGPM own of ACLY, including through wholly-owned subsidiary?
3 How many officers/directors of PGPM are directors or officers of ACLY?
This is dated (2008) but...
Re: Russian oil industry problems
http://www.economist.com/node/11332313?story_id=E1_TTPPNPTP
That's good.
Our leverage is in the auditors' hands, uh, computers. It is hard to believe any outside investors want anything less than a clean sheet to work with.
So which is correct?
Am I reading this wrong? It looks conflicting:
PAI -
"Here's the deal with the June 7th LOI deadline:
Matt's response to my question regarding the LOI and June 7th deadline and whether ACLY can procede without resolving the issue with PGPM--
"Mostly true, from what I have been told by ACLY."
Matt
ncpti -
"as ACLY has to clear up the debt with PGPM before they can go further."
Ditto.
"So what you are saying is that Ralph would have given us squat for our $40M leases and then turn around and try and purchase $125M worth of another lease? What a slimeball."
It will be also interesting to see what, if anything, is actually offered... New auditors are often "friends" to grieved investors, as they clean things up, without mercy, and don't have the same ties to past decisions.
0.002 plus.
That's if $2.5 million cash, but it won't be in cash. PGPM needs some oil producing properties.
If as ncpti said this weekend, there is no $125M financing deal for Arcland until ACLY's obligation to PGPM is satisfied, and there is 90 days from the date of of LOI to complete the deal (i.e., by June 7th), some compensatory formula will have to be produced and approved pretty soon. IMO only.
Where did you get that number of shares?
Arcland is showing the following on Pink Sheets:
Shares Outstanding 5,402,820 a/o Apr 01, 2011
Wow! Very good...
You say:
1 There will be more information coming out regarding this very >>>n
Excellent.
2 as ACLY has to clear up the debt with PGPM before they can go further.
Excellent!
3 They have hired an outside auditor to get the financials in order.
Excellent! Excellent!
4 If they don't clean up the dept they will not be allowed to go further with the Russian deal
Excellent!
5 I see a possible money and stock payback with ACLY.
Good.
6 ...along with free trading shares it will be way more valuable than the 40 mil owed now.
Not true, but still good.
Thanks for info. As always, a great help to us pions.
And true.
Also, we should be vigilant about the $40 million owed to Pilgrim, especially. I found the info Matt gave earlier to be dangerous, that is, concerning his "willingness" to accept much less, even down to $2.5 million, or further.
In accounting, it doesn't work that way. Insiders cannot decide to have a transaction with an affiliate for a certain sum, and then decide later that affiliate will simply pay less. Self-dealing. Not an arm's length transaction; in fact, that would be subject to a strong lawsuit and regulatory action. If that was the case, EVERY affiliate would be stealing from other affiliates. And not taking action when the properties deteriorate, to protect other corporate insiders, ditto.
As I've written, don't trust anyone, we are not being labeled "misfits" for nothing.
The valuation.
Some on here are saying PGPM "owns" 10% of $125 million. Or now, 20%. Somehow this translates to a $12.5 or $25 million assets.
But it doesn't really calculate that way. The Swiss investors, or whomever, contributing the $125 million get the $$$. For that matter, Arcland's role isn't defined. They may be hiring others, or being hired. Don't know at this moment. Pilgrim may be holding a much smaller piece of the pie than it does now.
Not to fret. Arcland's stock will bump up, I'm guessing, and fairly significantly. PGPM, as initial 10% or 20% owner of Arcland, would go up a lot too, but how much is anyone's guess, without the details.
OK, I'll clarify...
I was going by what Arcland is currently showing:
Preferred Stock
The Regency Group LLC
4600 S. Ulster St. Suite 975
Denver, Colorado 80237
(303) 771-7300?
252,145 25.21%
Preferred Stock
JJC Capital LLC
1050 Lake Carolyn Parkway
Suite 1347
Irving, Texas 75039
531,416 53.14%
If this isn't so, nevermind. But, I was really talking about a post equity financing situation for Arcland. Usually principals (insiders) wish to shelter themselves from the effects of common stock dilution resulting from equity financing; and they can do that by establishing a new class of shares, such as preferred or a new class of common. This usually happens early on in the organizational stage, but there are ways to make it happen during special financing circumstances. "Investors" in Switzerland, or elsewhere, want the major piece of the action.
I agree with much of what you say.
But I'm leary of the financing sought for Arcland. Is this a private-equity financing arrangement, whereby 100 million plus common shares of Arcland will be issued? If so, PGPM's 20% holding of ACLY just went to around 2%. And preferred shares for Arcland insiders. (Yes, if Company A owns 100% of Company B who owns 10% of Company C; then Company A owns 10% of Company C).
Or, maybe another class of shares will be issued (common or preferred), with typical preferential terms for the lender(s). The piper will be paid.
Don't know yet; or, of course, if it will even happen. Still, if it does, this will be a boost to Arcland, and in turn, to PGPM. The docs indicated a decision must be made before June 7 (re: 90 days from March 7).
Thanks!
Well, Look at this:
"SECTION 2. Special Meetings. Special meetings of the Shareholders, for any purpose or purposes, may be
called by the Board of Directors, by the holders of not less than one-tenth (1/10) of all the shares of the Corporation
entitled to vote at the meeting, or by the President of the Corporation."
So, why can't we call a special meeting?
"by the holders of not less than one-tenth (1/10) of all the shares of the Corporation
entitled to vote at the meeting, or"