I have read all 296 pages of the S1 filing as well. Clearly there will not be shares issued to current shareholders. Rather, IDT will retain 66%. Effectively, for every dollar in net2phone capitolisation. 66 cents will be directly attributable to IDT shareholders. At first I was upset by this. However, after spending the day talking to analysts, internet reprters and doing my own calculations. I have come to a completely differant and positive conclusion. BTW, I even called Michele Wolfe from BS at home and discovered she had resigned yesterday. Lets all wish her the best in whatever great new position she lands. She is a wonderful analyst.
The gist of what I got was that everyone thinks that this allocation of shares is MUCH better for stockholder value than giving shares to shareholders on a ration of say 7/1. Here is why. Many of the institutional telecon holders bailed out shortly after IDT announced they were spinning off the internet assets. They did so because they were afraid that once spun off. The company would have given away a major assett and they would be left with equities in the core biusiness that were worth less. Under the scenaario the company has devised here however. They can actually spinoff net2phone. Achieve a market cap of 750M. Which will be valued at more than the core business and which 66% of can be easily attributable to. Why? Because it is a CONTROLLING interest. So, IMO the telecon analysts will be upgrading here fairly quickly because they have definately increased shareholder value witout giving away a controlling interest in any asset.
Secondly, I spoke with Matt Ragas at ragingbull.com. He will be writing a detailed article on Friday about this. Remember, he originally predicted most of this. Here is the link to his original article:
ragingbull.com
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Matt agreed that the issuance of stock in this manner was extremely beneficial to existing shareholders. As, I said. He will have a more detailed article out on Friday.
Here is an example.
Lets say you own 1000 shares right now at 28 1/4 and the company were to give you 1 share for each 10 you own. You would get 100 shares in the net2phone IPO. It would probably price at 25 and immediately go to 50. So, you would make $5000.00. However, your IDTC stock would probably drop to $20 after the spinoff. Therefore you would lose $7,000.00 on that. A net loss of $2,000.00. However, under the sceario that the company has devised. IDTC shares will go up by 66% of the new cap of the company. The new cap is likely 750M or more. Figure it out. This stock WILL rocket and rocket continually everytime net2pghone/idtc does another deal. We will easily be at $40 in short order here and the sky is the limit from there.
Once people understand that by owning IDT, you get 66% of the hottest internet IPO there will be. The problem will be resolved.
To summarise, we are MUCH better off without shares in the IPO. Obviously HJ believes this too. Do you notice his only participation in the IPO is as a shareholder. Just like us? If he didn't believe in it. He wouldn't have structured things that way.
Anyway, everyone kick this around. I think, and the professional that I spoke toooo, think it is GREAT.
This is not like Ziff Davis with 20%. We have CONTROLLING interest of 66%
Best regards to all. |
