EC and Gib, take a look at this-lol. I say NWI should be worth the same after the spin off as before the spin off.
raymo on SH NWI thread:
Hey charles99,
No problem. Your question was a matter of debate for weeks leading up to the meeting. I always suggested that it was like a share split, and I confirmed this while I was at the meeting last Friday.
What you have to realize, is that this is not an IPO, you are not paying for your new shares in Victory Nickel. Nor, is it a rights, optioin or a warrant with subscription fees attached. The reason there is no money involved in you getting the Victory Nickel shares, is because you already own the equity within Victory Nickel through your ownership in Nuinsco Resources 'NWI'.
All that is happening is that the nickel assets will be separated from Nuinsco. All of the nickel assets you once owned through Nuinsco (they are yours) will trade through this new entity called Victory Nickel. This leaves Nuinsco without nickel assets (except for shares owned in Victory Nickel) and therefore it is obviously worth less without the nickel. But that doesn't make any of the shareholder's worse off since you still own the nickel, just that you now own them in another stock.
In regards to ownership, we know that the shareholders get three/quarters of a share of Victory Nickel for every one whole share of the current Nuinsco come spin-off time. Out of all of the shares of the new Victory Nickel, one-quarter of them will be owned/issued to Nuinsco Resources (now a separate company). This will enable Nuinsco to enjoy gains made by Victory Nickel. After the spin-off, Nuinsco will no longer be the same as it is right now (pregnant with Victory still). Therefore, since there is substantial material difference with the stock, a 'new' Nuinsco share will also begin to trade on the same day Victory hits the market. Same symbol, but materially different.
You must realize, this Nuinsco share, will cease to exist, and 2 new shares will take its place. New Nuinsco & Victory Nickel shares. But the overall equity is unchanged. That's the tricky part you are trying to understand.
The price will change from pre-spin-off to post-spin-off because of the division in overall value of the stocks. To make it simple as pie sorta speak, lets just one single share of Nuinsco and analyze the split procedure. One share of Nuinsco right now includes everything that Nuinsco and the future Victory Nickel have to offer. It's price as of today is $1.46.
After the spin-off, if the price doesn't change from today. Nothing else will make the price of that share change except for trading in the open market. But after the spin-off you are splitting the share in two. They are not equal parts. One part after the spin-off will be worth 57.1% of today's Nuinsco share and that part will be the 'NEW' Nuinsco share (it is larger because it owns 25% of the Victory Nickel shares along with all of the fine properties in Gold, Uranium, Copper, 10.4% shares in Campbell Resources as well as rights to 50% of future projects with Campbell Resources.) The other part forms Victory Nickel, it is worth 42.9% of today's Nuinsco share.
How did I come up with the percentages? From the given values of the future shares to trade. Nuinsco management has given us the value of the shares after the spin-off. They are $2 for the new Nuinsco and $2 for Victory Nickel. The easiest way to decipher the 1 old share of Nuinsco gives you .75 shares of Victory Nickel is to take it out of decimal or fractional format by multiplying both by 4.
4*1 is 4
4*.75 is 3
7 shares in total
New Nuinsco accounts for 4 shares of the 7 shares in total 4/7 = 57.1%
Victory Nickel accounts for 3 shares of the 7 shares in total 3/7 = 42.9%
Therefore, if you have 4 Nuinsco shares before the spin-off, you know that you are going to get 4 new shares of Nuinsco to "REPLACE" your 4 shares of the old Nuinsco, and you are also getting 3 shares of Victory Nickel. The price again? $2 for all of them. Now, using reverse math from my previous examples, you own 4 shares of New Nuinsco which gives you $8 in total. You also own 3 shares of Victory Nickel which are worth $6 in total. This gives you $14.
How many shares did you have before the spin-off? Four.
So, if you only have four right now, and you know that your 4 shares of new Nuinsco and 3 shares Victory Nickel equal $14. It is easy to figure out how much each of your 4 current NWI shares are worth.
You simply take $14 and divide it by four. This gives you $3.50.
So, your four shares of Nuinsco right now worth $3.50 each, will give you 4 new shares of the new Nuinsco worth $2 each plus 3 shares of Victory Nickel also worth $2 each.
Old Nuinsco (4 x $3.50) = "Your total equity $14" = New Nuinsco (4 x $2) + Victory Nickel (3 x $2)
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