To Leigh et al. The quality of this deal for us WRN shareholders is wholly dependent on the number of shares that will be outstanding in SKTX after these deals are done. (In a sense the prices for Skytop and Taylor Rigs are merely bookkeeping entries in a closely held reorganization.) If WRN gets 435,000 shares of SKTX and SKTX has 1,500,000 shares out after the deal, then we get approx 30% of SKTX. On the other hand, if SKTX has 50M shares out, we end up with 1% of SKTX. The first arrangement would be OK, the second rotten.
This doesn't look like a brand new company to me and could have quite a few shares already out. On the other hand, they may have a clean shell with shares rolled back to 1 or 2M. With 503,000 pledged to Skytop and 500,000 pledged to WRN/Taylors, and three new people we haven't heard of before, all of whom probably have a bunch of shares or options pledged to them, we could have at least 2M shares out and quite possibly more. Like Leigh, I am not currently feeling very comfortable.
Until we know SKTX's current capital structure, we can't figure anything. Does anyone know how many shares of SKTX were out there before these two deals were done? DOn't forget options, since fully diluted shares may be considerably higher than the outstanding figure in a situation like this. I've looked on the internet and at FreeEdgar but found nothing.
Also, we need to keep in mind that SKTX is saying they intend to do a 504 private placement in order to pay for the cash part of the deal with the Taylors. This is apparently separate from the $10M deal they appear to be hoping to do later, but I could have that wrong. $10M at $5/share is another 2M shares. Suddenly, it looks like WRN is going to get *at best* 5-10% of SKTX when all the dust settles.
Any comments?
Steve |
