Gigwoof, Spec29 in post#5009 named the process for me as "Pre-emptive rights". You had asked for more particulars, and to describe why I thought such an offering would depress the SP before the strike date.
I was thinking about such a share offering from my over-bought situation: I too am sucking air through a very long straw, to quote BB (was he subconsciously thinking about his op today? bless him).
Think about an example: Let's say stockholders of record as of June 10th, 2005 would be entitled to purchase 1 share for every previously owned 4 shares at a 25% discount to the June 10th shareprice. What would a non-144 insider do with this info?
Some would buy more stock. Then when June 10th rolls around they can buy more discounted shares (stock price goes up prior to June 10th in anticipation).
However, if those same insiders were over-bought and already had the maximum amount of shares their portfolio allowed, they would sell about 1/5th of their shares and use the proceeds to buy those same shares back at a discount and pocket the 25%.
As it is, if ERHC were to offer such a pre-emptive sale I wouldn't get bones. Unless I could pull a short-term loan and then sell long-term capital gain shares to pay for the loan. (SP would go down upon discount distribution if everyone did this, another reason to sell into the rumor of such a distribution).
That said, most likely the SP is down because people are generally wary about our financing and they're thinking they have plenty of time to buy now.
To Cobrajet: Offor does care about the SP because financing will be involved and shares are our collateral. Offor sees our current SP as a baseline that someday will just be noise. He's long term and so far has benefited from a low SP since the dilution has been to him. As people pointed out last January, he deserved the cheap shares because he's the one pulling this off. (Then again, he's keeping JC on the staff, grrr.)
Homeport, you asked longs to address your concern that we haven't really won the awards: I think its a terminology issue. We have been given our very substantial rights. I believe the additional awards offered have not yet been accepted by our consortia. The awards will most likely be accepted; I cannot believe that ERHC et al. didn't OK paying the higher signature bonus. (Actually, I see Anadarko as having won the bid in block 4, but ERHC/Nobel as having won the operatorship. Semantics, but ERHC did not rebid, which would be illegal...). Finally, what is murky is the question as to what % of the awards belong to ERHC. We really could get anywhere from 1/3 to zilch of the awards, but we still own our very substantial rights to JDZ acreage.
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