Claude,
I have a great deal of respect for your work and that of others on this board but I think that recent posters are trying to spin a positive out of a negative. Based on some very rough ballpark calculations, it appears that, at today's stock price, Pan American has lopped about 20% off their bid price. However, should Pan American stock appreciate greatly from here, the discount will eventually disappear. Please note that, in my opinion, the best case scenario is that the new deal eventually reaches parity with the old deal. By my rough calculation, the two deals would be equivalent at a PAA price of $50 CDN. I have not been able to think of a situation where the new deal is superior.
Assumptions
Original Deal
.54 Share of PAA for each BAY share
.25 share of Exploreco for each BAY share (guesstimate its current worth at 0.25 per BAY share - i.e Exploreco trades at $1)
Bid Value with PAA = $12: $6.73
New Deal
.385 Share of PAA for each BAY share
.1925 warrant for each BAY share (guesstimate its current worth at 0.60 per BAY share - i.e. Warrant trades around $3, given a PAA stock price of ~$12)
Bid Value with PAA = $12: $5.22
Caveats:
Unless PAA issues more warrants, the market will be extremely small (4 million outstanding). Thus, there could be a wide differential between the BID and ASK.
Maybe someone else steps up to the plate to bid for BAY or shareholders vote this New Deal down. |
