Neil Koehler and investors gather over a golf match and agree upon a plan from which everybody would profit. The plan is as follows:
- on purpose send-out an old earnings release; numbers look bad-ish, and they trap even more shorts + collect some stop limits
- on Monday give good earnings
- on Tuesday give good guidance, announce Madera bring-up, corn oil extraction, cheap milo
- pps flies
- sell warrants to investors who perfectly know what is going to happen; NK as an insurance for PEIX limit the warrants exercise date not before a year from now, to have enough time to bring the pps over $1 without dilution from investors exercising the warrants
- vote for R/S passes, but since the pps near or over $1, no need to R/S - YET !
- before June 3th PEIX is ABOVE $1 for more then 10 days and remain on NASDAQ
- whole 2013 is a great year for ethanol producers; record corn crop with high oil prices
- PEIX pps ends @ $2 at the end of the year
- annual shareholders meeting - PEIX does the R/S - 1:10; new PEIX pss is $20
- no shorts in near site and pps slightly rises
- investors start to exercise warrants, but given the strong balance sheets, pps doesn't go down, and keeps the price at the level
- PEIX does public offering with which proceedings buys remaining plant ownership
- pps continues to be strong given the cheap corn ($4 per bushel) and oil over $130 due to North Korea - USA and Iran - Israel incidents
Everybody won:
- Old investors exercised their warrants
- Neil owns 100% of the company; buyout offers start to come in, but PEIX has still lot of shares to dilute and thus in better negotiation position
- New investors exercised their warrants after R/S but still with big profits
- Banks got their money back with interest
- Small investors who had faith, sold their from a year ago positions with a nice profit
- Eventually PEIX got bought out from a big oil company and NK can retire
When you think about it, this scenario, although very optimistic and almost utopian, might happen.
