It is what it is
When I initially looked at this company, I had hope that the problem was just a cash flow problem that could be solved with selling off some assets. From what I have seen so far, the problem is a whole set of problems and things that did not go the way the company had expected. I think the company was too positive about how things were going to go plus things happened that no one expected.
One of the big surprises is the decline in the price of gold. With central banks printing money all over the world, who would have thought that the price of gold would have dropped for months?
My value of a reformed company, in the range of $310 million to $500 million, is from a report and that is only able to be realized if the company can somehow raise $1.3 billion in order to build what is needed for operations. That is not going to happen. Why would anyone loan or invest a billion dollars with a company that has lost all kinds of money?
I am surprised that the current common shares are even being offered warrants in the proposed reorganization plan since it looks like the debt holders are all going to have ownership in assets that may not be able to ever repay the principal on the debt. I am expecting that at the 'end of the day' the debt holders are going to be looking at losses also and are not going to get back all of their money.
I am aware the company did issue more shares late last year. To me it looks like the company hoped that maybe the problems were over and that if 'they just had a little more cash, they would make it'. I do think what the company did was wrong, but the money is gone, and the company is a financial train wreck.
If 10% of the best case for the company gives it a value of $500 million, means that warrants for 10% would only be worth $5 million. The stock closed at $0.17 with a market cap of $21.2 million; so the shares are still too high. The shares need to be at $0.04 for a market cap of about $5 million, and the shares need to be bought for even less than that to make a profit and have a margin to compensate for the risk of owning the shares for months or even years in the bankruptcy, plus the time after the bankruptcy that may be needed for the stock in Newco to rise so the warrants can be exercised or have value.
Your order for 10K shares at $0.16 didn't get filled because other people are bidding up the stock price because they do not realize how little the company is worth. They are making a horrible mistake and are guaranteed to lose at least 75% of their money, plus they run the risk that the final plan cancels the existing common shares, in which case they will lose 100% of their money.
Louis J. Desy Jr.
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