John-
This filing registers the common stock that would be issued if the 2 venture funds exercised their Series C preferred stock and warrants. If all preferred stock, warrants & options were exercised, there would be about 35 million shares outstanding, up from the current 26 million.
It's not likely that these funds are going to sell the stock immediately, because that would defeat the whole purpose of their investment objectives. I hope that their investment resulted from an awareness of the company's interest in finding a suitor. (Actually, I'm hoping that NM is aware of their own interest in finding a suitor.)
Unfortunately, the added dilution will likely reduce the ultimate price any buyer would pay. For example, if another company was looking to pay $300 million for NM, the price several months ago would have been $12, whereas now it would be $8.50. And I've not even considered paying for the company's debt. Therein lies the dilution to our value.
I have no idea on a timetable for a buyout, although I've heard that the management is trying to cut a deal by year-end. Who knows anymore?!? What would it take to get someone interested in buying NM? Hmmmmmm...Let's see...Perhaps NM management needs to accept some offers, even though the price may not be as high as they would have liked. Supposedly, NM refused a buyout offer at $15 earlier in the year. Perhaps the company has forgotten what it's like to have the stock move up?
Although the recent moves by management to "secure" NM's financial situation were desperately needed, they have resulted in massive dilution to current shareholders. As I have explained, this will likely reduce the offering price that we will see, assuming the management ever understands what "increaseing shareholder value" means. 8 or 9 months ago, the company could have sold out for $15, and it was probably worth $20 (for spendy buyers). Now, due to the additional debt and equity, I am not sure the company can find any suitor to pay more than $10.
I'd like $10, but frankly I'm growing weary of waiting for this buyout. Several of my other stock picks this year have doubled, so I could probably sell my NM, invest the cash in other stocks and do better than I could by waiting. I've been considering giving up on this stock, but I haven't done so yet. I assure you that I will keep you and this thread updated as to any change in my position.
Todd |
