ERHC Energy Inc (ERHE)

[jbofthecloth]

1:1? Afren is priced at 113.5p and a market cap of about 310 million pounds ($610 million). 113.5p is about $2.24 US. A stock swap would be on about a 1 Afren for 10 ERHC ($2.24/$0.21=10.64). A stock swap is exactly that. Since the shareholders maintain a portion of the company that is acquired there is very little premium.

A swap would see Afren issue about 72 million shares for ERHC. The New Afren would have 345 million outstanding with ERHC shareholders owning about 21%, a market cap of $773 million. 21% of $773 million is $162 million (an 8% premium to our current $150 million market cap).

A stock swap makes good sense as there is no willingness for current ERHC shareholders to sell out and lose any potential upside, we'd get good management, get our assets out of the US and potentially a small premium.

Let's hope.