The entire 110M shares for the new private company "etc" will be issued seperately for that new entity. It has been stated clearly that the "new company" will have an initial A/S of 110M new shares of which around 99.1M (less than 100M) will be issued immediately as a "dividend" on a "1 for each 10 EXPH shares held" basis concurrent with EXPH shareholders of record on the date specified. This will leave the new entity with around 18.9M shares with which to raise operating capital if it should be so decided. It shall also leave approximately 9M shares of the old company remaining in the A/S till for EXPH.
I am uncertain as to how these new "etc" shares will be valued and that is what has me worried. Will they be assumed to be worth approximately 9 times the old shares as "certain intellectual property, operating capital, material handling equipment" and other possible valuable consideration will be transferred from EXPH (and possibly D&D Displays?) into "etc" upon the spinoff? How then will this effect the valuation of EXPH with assets being transferred to the private company but no immediate new wealth being created? The CEO has been very cautious in advising that shareholders shall expect this company to take "years, not days or months" to create the sought after increase in value. A question I might raise at the shareholder's meeting would be the exact percentage of assets being transferred to "etc" as a percentage of all current assets of EXPH Holdings. For if the intent is to transfer nearly all of the current asset base of EXPH to this new company with around 11% of the total A/S share count of EXPH, it would end up dictating a valuation of "etc" of around .08 or .09 cents a share, with the old shares being reduced in value to near nothing. Essentially accomplishing a similar end result to a 9/1 reverse split with 18.9 M new 8 to 9 cent +/- shares available for sale. I would want the CEO to be very, very clear on every detail of this "asset transfer" from EXPH to "etc" as it is at the very root of how shareholders will be affected fiscally.
If I understand this correctly there will be no buy-back of shares whatsoever. Likewise, you can't create a 99.1M share "dividend" when your current remaining A/S is only 9M shares without issuing more shares. Only an issue of the additional 110M authorized shares for the "etc" spinoff of which 99.1M will be given back to shareholders of EXPH will accomplish that. The A/S for EXPH after the spin off will remain one billion shares as it is now, unless I have missed an announcement to the contrary. I can see no true alternate reasoning behind this move other than to provide a potential source of operating capital that could be raised through share sales in private placements if it were so deemed necessary by management at some time in the future. At this time, management has obviously stated repeatedly that will not be necessary. But the remaining 18.9M "etc" shares and remaining 9M EXPH shares will be potentially dilutionary. Those 18.9M from "etc" exceptionally so dependant on the above referenced "asset transfer". All IMHO.
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