I sent this mail in Dutch to my fellow shareholders in Belgium over the weekend as I had the impression that there was still some misunderstanding about the Spac deal.
I still have the impression that some Niocorp shareholders do not understand the SPAC construction. I understand that because it is indeed not simple. I am trying to explain it.
In the frequently asked questions you will find the following info about the value ratios between Niocorp and GXII
About the exchange ratio
The approximately U.S.$0.89 per NioCorp share equity rollover value represents an approximately 14% and approximately 12.6% premium to NioCorp's common share spot price and 20-day volume-weighted average common share price, respectively, as of September 23, 2022
At the closing of the Transaction, GXII shareholders will receive NioCorp common shares based on a fixed exchange ratio of 11.1829212 (the "Exchange Ratio")
11.1829212 X 0.894 usd is 10 usd and 10 usd is the share price of GXII .
About the reverse split.
In order to be listed on the Nasdaq, NioCorp will have to satisfy several listing requirements, including a minimum share price. NioCorp intends to conduct a reverse stock split to help ensure that NioCorp will satisfy such minimum share price requirement. The ratio of the reverse stock split is yet to be determined. It is important to note that a reverse stock split does not affect the value of a shareholder's investment in NioCorp. For example, if a shareholder has 100 shares of NioCorp at a market price of $1/share prior to a reverse stock split, the market value of the shareholder's investment is $100. If the Company conducts a one-for-10 reverse stock split, the shareholder would then own 10 shares of NioCorp at a per share market price of $10 immediately following the reverse stock split. The market value of the shareholder's investment in NioCorp would still be $100, and would not change as a result of the reverse stock split.
My comments summarized
The merger with SPAC is a "financial engineering exercise" and ultimately, if all GXII shareholders participate, corresponds to a capital increase of up to 285 million usd at a share price of 0.894 usd . If all participate, the shareholding ratio between the old shareholders and the new shareholders will be 43/57. If some shareholders in GXII do not want to participate, our share of the pie gets bigger but we get less cash. .
To get on the Nasdaq and merge with GXII, NioCorp is doing a reverse split which will be determined at the time of closing. This reverse split has no impact on the dilution in the transaction. The dilution depends on the number of GXII shareholders voting Yes.
1). If NioCorp stands at 1 usd at closing date, the reverse split is 1 new share for 10 old ones.
2)However, if Niocorp rises to 5 usd in the meantime, the reverse split is 2 for 10.
The reverse split only changes the total number of shares so also the number that each party gets in Niocorp, but always in the ratio of the values that were established on the date of the signing of this deal and thus also the number of yes votes in GXII. So from that day,if the transaction goes through, all parties benefit from an increase in the share. The only thing that changes is the number of shares you get at closing, but the total value of your holdings does not change on that day.
For example, if just before the closing the stock is quoted at 1 usd we get a reverse split of 1 for 10. Before the closing you then have 1 million shares at 1 usd with a market value of 1 million and after the transaction and the reverse split you have a hundred thousand shares at 10 usd so also 1 million usd in value.
If at closing NioCorp's share has risen to 2 usd then you had a market value of 1 million usd times 2 is 2 million usd but there is a reverse split of 1 for 5 , so after closing you have 200,000 shares at 10 usd so also 2 million usd in value. GXII benefits also from the rise to 2 usd and then gets more shares from the merger. The ratio NIOCORP / GXII remains the same and depends on the amount of cash contributed so on the number of GXII shareholders who vote yes.
One more thing. If you doubt the fairness of the deal.
DID THE NIOCORP BOARD OBTAIN A THIRD-PARTY VALUATION OR FAIRNESS OPINION IN DETERMINING WHETHER OR NOT TO PROCEED WITH THE BUSINESS COMBINATION? Yes. GenCap Mining Advisory Ltd. has provided a fairness opinion to the Board of Directors of NioCorp stating that, as of the date of such opinion, and based upon and subject to the assumptions, limitations, and qualifications stated in such opinion, the Transaction is fair from a financial point of view to NioCorp shareholders.
Translated with www.DeepL.com/Translator (free version)
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