I've got one very good reason for no info, which would of course be good news for us all. The inside folks would just as soon keep it quiet to slowly scarf up shares of both companies. There has been no massive selloff of AVIA (just very slow downward pressure) which means the people holding AVIA aren't spooked but perhaps someone is nudging the price down to stage a last-minute grab. POKR's price has, as I said, bee in that 10-cent channel since the announcement, with slight up or downticks toward the close of each day. Its price is also being guided, keeping it from wandering far from that track.
From the investment standpoint, a delay would be devastating in the following scenario. I hasten to add I have no reason to think this will happen, only that it could:
Say all chugs along and the shareholders vote to join companies on Sept. 1. At that time, AVIA is, say $2 a share and POKR is .33. If the stock conversion glides ahead. POKR become worth .62 in AVIA shares. Huzzah! We're all swimming in AVIA.
Now, those who are long in POKR-AVIA are happy as clams, because they weren't selling anyway. The traders, though, want their shares now to get out. Meanwhile, downward pressure hammers AVIA. The longer it takes to get those active shares out, the lower the price.
From Sept. 1 to Oct. 1, AVIA drops to $1.50 again. From Oct. 1 to Nov. 1 it dips to a dollar. That 100 percent markup you got from POKR's conversion just disappeared as the actual value is back to .31 in AVIA terms.
By now the flippers are screaming, still stuck in shares they can't convert and a profit that has disappeared. If it drags until Jan. 1, they can't even sell to take the tax loss. And if it drags that long AVIA will tank as other investors sell off to lock in the loss and buy back in 1999.
Under that scenario, Jan. 1 dawns with AVIA trading around .50, meaning the POKR folks have now lost. Their share value of AVIA is now about .15, which is last year's 52-week low. The folks who were institutionally shorting AVIA now recoup with shares 75 percent off their original position.
Now their trading shares of AVIA are released. Enjoy.
AGAIN, I am not for a minute saying this is what will happen. My fervent wish (since I'm long on both sides now) is all will run smoothly, we'll all be rich by Halloween and have to figure out how to pay the capital gains.
But this can happen. It HAS happened elsewhere. And that's the advantage in delaying conversion shares.
Which is also why there hasn't been a mad rush to the POKR gate.
If someone from either company can say with certainty when the trading of the new shares will begin, it will remove a lot of uncertainty and cut down on any chicanery by outside interests. It will be interesting to see if a drop-dead trading date is forthcoming. For our sakes, I hope so.
Take care,
Chick in NC |
