Replies to post #205 on Aly Energy Services, Inc (ALYED)

[Sobek]

Not confusing in the least bit. It was one of my concerns as well until I put the pieces together. My conclusion is this is what preferred shares are meant to be used for. Growth, shareholder value, and most important, an investment for multi millionaires.

90% of the time OTC companies will use and abuse preferred, I see it all the time. But this is not $ALYE's intention imo. I see a pattern here that is very comparable to how the same management team that took Allis-Chalmers Energy to a NYSE IPO and later sold the company for over a billion dollars is doing the same thing here. Right down to Mr. Hidayatallah taking his place as executive chairman, the formation of an LLC to manage debt, and the hiring an over the top CEO like Mr. Kundagrami who after 10 years left The Royal Bank of Canada as Co-Head of The Energy Group to take the position of CEO with Aly Energy.

You have to remember that the company now has no outside debt. The debt is their investment money. Unless something goes terribly wrong, they currently have no reason in the world to liquidate their preferred shares.


If you refer to page 18 of the last quarterly report, Note 7 read's as follows:

"Pelican’s contribution of approximately $16.1 million of the Aly Senior Obligations into shares of Series A convertible preferred stock that represents approximately 80% of our common stock, or 53,628,842 common shares, on a fully diluted basis. The preferred shares carry a liquidation preference of $1,000 per share or $16.1 million upon issuance."

There's currently 25 million common shares authorized with 13.8 million outstanding of which over 60% are held by insiders as reported in their OTCQB certificate last month. That currently leaves only roughly 4 to 5 million shares available to the public.

If the Series 'A' are liquidated in full, that would be a maximum of 78,628,842 common shares. When broken down on a fully diluted basis that would give them a book value on a fully diluted basis of .35, hence the accumulation picking up in this area.

To compare, current Chairman, Mr. Hidayatallah, merged former NYSE: ALY (Allis-Chalmers Energy) with Seawell Limited in 2011 in a deal worth $1.125 Billion. At the time ALY had close to 250 million common shares outstanding. The merger banked shareholders approx. $4.50 a share.

Here's a quote from his Bloomberg profile:

Mr. Hidayatallah served as Chief Executive Officer of Allis-Chalmers Energy Inc. (formerly Allis-Chalmers Corporation) from May 2001 to February 23, 2011, where he was responsible for the overall management. Mr. Hidayatallah oversaw IRI’s initial public offering and listing on the New York Stock Exchange. Mr. Hidayatallah served as President of Allis-chalmers Energy Inc., from May 2001 to February 2003 and served as its Principal Financial Officer. He served as an Executive Chairman of Allis-Chalmers Energy, Inc. from May 2001 to February 23, 2011.

$ALYE