Who cares about what proportion shareholders are getting??
I think the big question is how much Ike/John thinks GoCom is worth as an independent company. This is the valuation of the company. Divide the valuation by the number GoCom shares that they are planning to offer, and we will know the price of each share. Now with some examples with numbers, it's going to look scary...
Using some very rough numbers...
Lets say right now GOIG has a total of 4,000,000,000 (4B) total shares, and each share is worth $0.001. This means GOIG is valued at $4,000,000 (4M). Now lets say Ike/John decides that GoCom is a $2,000,0000 (2M) company. So if they also decide that one share of GoCom is going to be priced at $0.001 (same as GOIG share price), then this means the GOIG:GoCom share ratio is 2:1 (meaning you will get 1 share of GoCom for every 2 shares of GOIG that you currently own).
So here's the scary part:
If GOIG shares become totally worthless after the spinoff of GoCom, all you have left of any value are your GoCom shares. In essence, you have just lost 50% of your investment, ALL BECAUSE IKE/JOHN HAD DECIDED THAT GoCom IS WORTH HALF OF GOIG. Along the same line, if Ike/John had decided that GoCom's valuation is at $1,000,000 (which is 1/4 of GOIG), then you have just lost 75% of your investment. So again, what we should all be asking is how much Ike/John thinks GoCom is worth.
So my point and concern is why is everyone worrying about the GOIG:GoCom share conversion ratio? That shouldn't be the main concern. Ike's use of the term "proportionate" already implies fairness relative to all shareholders, given that the proportionating process is done correctly and by the books.
For example, lets say you're a huge investor and own 40M shares of GOIG. That means you own 1% of GOIG ($40,000), and will own 1% of GoCom. Again, assuming the share price of GoCom is also at $0.001, you will get 20M shares of GoCom (20M x $0.001 = $20,000), not 40M because GoCom's valuation ($2M) is only half of GOIG's valuation ($4M). In this case, you can see that the GOIG:GoCom share ratio (AKA the "proportion") is 2:1.
On the other hand, if they decide that the share price of GoCom is $0.05, then you will get 400K (400K x $0.05 = $20,000) GoCom shares. In this case, the share ratio becomes 50:1. But guess what? You still own 1% of the company. Money-wise, you still only have a $20,000 stake in the $2M company. You did not get any richer or poorer if the valuation of GoCom is unchanged.
Now, for some optimism, say they think GoCom has a $3M valuation. Your 1% ownership of the company translates to $30,000 of the $3M company. If the ratio of 50:1 is kept the same, you will still get 400K GoCom shares, but each share is $0.075. (400K x $0.075 = $30,000). However, if the share price is kept the same at $0.05, then you will get 600K shares. (600K x $0.05 = $30,000). As you can see in both of these cases, the value of your investment has increased by $10,000, solely because GoCom's valuation has increased. It doesn't matter what the share price is, or what the GOIG:GoCom share ratio is. As long as it's proportioned fairly among the investors, all that really matters is what Ike/John thinks the valuation of GoCom will be.
In the equation below, if Valuation is kept constant, then:
A) Raising "Shares" will force the "Price" down
B) Raising "Price" will force the "Shares" down.
C) If we raise "Valuation", one or both of the other two variables will increase accordingly.
D) We should all be worrying more about what the Valuation will be, and hope that it will be as high as possible. The concern over the "proportionate" stuff is not relevant here.
Shares x Price = Valuation
