foxi, I've got a couple a questions that you may know the answer to and/or for those who interpreted the filing different from me, and are seeing it as though we're gaining from this.
1. SAGA right now has roughly 4.7M OS, and a market cap of about $48M. Yesterday's example showed them taking the $450M, and using it split up 45M new SAGA shares at $10 value. Does everyone think that SAGA will remain at $10 or higher when they add 45M new shares, or will that pps drop down to somewhere between 0.97 - 3.99? (I'll explain below where the .97-3.99 are coming from)
- Right now ENZC MC is roughly $149M and SAGA is roughly $47,766,244. SAGA is purchasing ENZC for $450M by adding 45M shares to their OS and giving to ENZC. So, if SAGA adds 45M shares to their OS, and does this with a market cap of $47,766,244, it drops their pps down to roughly $0.98. However, since they're acquiring BGEN/VIRO, which basically hold all of ENZC value, what will that add to their value/MC? For ENZC, it's only $149M, so if we add that $149M to SAGA's pre-purchase market cap of $47,766,244, it would give them a post-purchase MC of $196,766,244.
SAGA pre-purchase OS = 4,346,337
SAGA post-purchase OS = 49,346,337 (4,346,337 + 45M new shares div'd to ENZC Shareholders)
$196,766,244 ÷ 49,346,337 = $3.98pps
For example, I'll use the example everyone was using yesterday, which included a 5B OS for ENZC. If somebody owns 1M shares of ENZC, they would receive 9,000 shares of SAGA valued at $10. If this were true, then they would see the gain below:
1M ENZC shares currently = $49K
9K SAGA Shares at $10 = $90K
Gain of $41K
However, what if that SAGA drops to $3.98 after the 45M new shares are added?
1M ENZC shares currently = $49K
9K SAGA Shares at $3.98 = $35,820
Loss of (-$13K)
My point here is that I saw a lot of calculations yesterday suggesting that we were gaining so much because everyone was using a SAGA pps of $10, but the question is, will it remain at $10 or higher once they purchase BGEN/VIRO & add the 45M new shares? I believe that ENZC (BGEN & VIRO) would need to be valued at/have a pre-purchase MC of an additional $296,697,126 to keep SAGA pps at $10 post purchase. The make-whole calculation happens before they pay the dividend to us, but will the 45M shares be added to their OS prior to that, so SAGA has an accurate MC before the dividend? Anyway, what I'm getting at here is that whether or not those shares are actually valued at $10 or higher when we receive them, will depend on ENZC's MC at the time of transaction. If we only have a $149M MC at the time of the transaction, where does the extra $296M come from that SAGA's MC will need to maintain a $10pps after adding 45M new shares?
2. If ENZC takes the full $450M to create 45M new SAGA shares to div out to ENZC shareholders, where is the money coming from to fund trials, which is what they originally told us this deal was for?
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