I am not actually so sure that I think this is a great deal, not just from the surface information anyway. If we get paid, what is essentially $2M, for Taylor Rigs, that is only .10 per share to WRN for our primary asset, whereas we were hoping to shortly see WRN itself, up above .10 per share in net earnings. If we then apply some industry P/E ratios to that .10, we should be able to move the share price and still own the asset.
A P/E of just 10, with earnings at .10 would give us a share price of $1.00 and we would still own the asset. Where for our asset to be worth $1.00 per share, with this deal, Skytex would have to be at $50.00. Or for WRN's earnings to get to .10 per share based on flow thru of Skytex earnings, Skytex would have to be earning $5.00 per share and I'm only talking about getting back to $1.00.
If there is nothing else to this deal, than an extension of Mr. Taylor's deal, I am not so sure I am in love with it. We'll obviously have to wait and see what the resultant details are.
Given that this release says that they are still in final "negotiations", there may be more to it. Let's hope this is the case.
Salut,
Leigh McBain |
