Replies to post #18166 on Pilgrim Petroleum Corp. (PGPM)

[PAI]

No one has anything to say or did you all stay up late? lol

I like the shares and money, Matt. I just want the money NOW and not a year from now. You can do wonders with it right now so I find it absurd that we can't get the money right now.

The problem is that the shares are going to be worth something a year or more from now and the money isn't going to be any worth to us until we get it so they are delaying any benefits to us by this initial offer.

Not sure where they would get the money from but that is not fair to us since we would have to wait a year just to get the money and up to another year to get some shareholder worth from the money.

What are the conditions of the 16 to 1 conversion?

What is your opinion, Matt?

Paul

[awesomebummer]

OK, sounds mighty fine, but...


(1)...how many shares of ACLY will there be if they "recapitalize?" (in other words, these shares would be diluted). Or, are they intending to NOT add ACLY shares? or, will there be a capitalized affiliate for the Russian venture (with its own shares instead), or both?

(2) You indicate this only affects the "note." Does Pilgrim currently own 10% of ACLY's common stock, and does American Petroleum currently own 10% of ACLY's common stock?

If one or both is true, why not pass these new ACLY convertible preferred shares on to PGPM shareholders?

(3) Could you clarify what this means: "Pushing for Board position ACLY to monitor Pilgrim's investment." If PGPM owns 20% of ACLY, why insn't there representation now? Or, do you mean YOU want to sit on ACLY's board? (which should have happened before).

[lazlotrade]

well, here is my rare detailed, actual, serious, for real, opinion (with some explanation - though most should be obvious to all) - no mas espagnol for this.

i agree with both nick and awesome b. to some extent, but this is a bit more beyond the thunderdome. gave this a little more thought.

need detailed agreement and quantified/verified info (due diligence) - not just - "hey, we'll give you some money "soon", and will give you shares in our company which we can run how we want (i.e., no more after we're done, your % of ownership may be reduced from 10% to .001%; we will pay ourselves what we want and deal with "our" assets as we choose (including selling to ourselves or our other companies for a penny on the dollar); and will tell you what we want, when we want, if ever, but again, "soon" it will be better if you agree - trust us). So:

(1) get as much money now as youo can (more is better, whatever there is may not be there in a year, although more excuses certainly would.

(2) if this was real (not misfit) continuing investment decision - by settling/discounting for "if come" investment value - which is kind of like a capital call from existing investors given the (our/their) history, i would want more detail, everything in writing, and the following in addition to any promises already received by Matt as condition of going for this (some necessary, some subject to tweaking:
(a) THIS IS NECESSARY. Open books of ACLY for present and periodic review by someone competent (not me) and trustworthy - including p/l statement, complete financial statement, and complete shareholder list; include disclosure of salaries/compensation, and tight cap - keep the principal employees/officers pay minimized, give them controlled stock incentives (so that their main compensation is contingent on success, and is shared with existing shareholders (e.g., PGPM - us). Need someone to be responsible for/to verify accuracy of what info is provided, too.
(b) THIS SHOULD BE GIVEN IN SOME FORM(since discounting note payment for future promises - must maintain ownership in exchange for risk). Get written assurances of no further dilution of PGPM % ownership absent certain conditions, such as minimum share value of "X"; i.e., if issue new stock PGPM receives stock distribution to extent required to keep its ownership percentage the same (this could be condition of preferred stock - by the way, what are the proposed "preferred" stock terms - especially upon liquidation, conversion or distribution?).
(c) THIS MUST BE GIVEN. No reverse splits absent certain conditions or absent consent of PGPM rep (who must make decision on what is best interest for PGPM).
(d) ??. Priority in any payments out to preferred shareholders (e.g., with respect to distributions).
(e) Requirement of guaranteed base valuation for any future stock sales (i.e., must get "X" per share), absent PGPM approval.
(f) THIS SHOULD BE A GIVEN. Definitely representation on ACLY board (and possibly veto rights for future asset divestment/sale/stock dilution or splits - see above) to assure no dilution of assets or sale/transfer below market to insiders or their affiliates.
(g) THIS SHOULD BE A GIVEN, AND IS TOTALLY REASONABLE. Requirements for periodic reporting/disclosures to shareholders/PGPM (no more secret games among the old boys network).
(h) THIS GOES WITHOUT SAYING, BUT GIVEN TRACK RECORD, MUST BE SAID. No sales other than cash sales at value (actual, not depreciated) to insiders or their affiliates.
(i) THIS REQUIRES SOME THOUGHT, BUT IS A DEFINITE REQUIREMENT: Sanctions for violating any of the foregoing or any agreed conditions must be provided (personal guarantees are real nice, but so is winning the lottery).

anyway, before i or my clients put up $ in such a situation, these are types of considerations at issue.

there is my substance for this quarter - now i can go back to cerveza.

laz

[awesomebummer]

Valuing this...


Given from Matt: "557,783 Shares Preferred (note interest + small portion principal) + $2,400,000 Cash by July 31st 2012
Convertible to 8,924,528 Shares Common ACLY!"

Then:
ACLY is pricing our former assets, as follows:
8,924,528 ACLY shares x $0.15 = $1,338,679.
Plus $2,400,000 = $3,738,679.

(Note: the underlining security prices the convertible security. Also, pricing is not by book value!).

That $3.7 million is a future value, which should be discounted to determine its present value, both securities and cash. So, the real value of this deal is less than $3.7 million. And, what interest will the preferred shares pay?