S.L. Waiting 3 years to secure a cornerstone investor and they come up with Landstead and on those terms?? Sadly, reeks of desperation, or, even naivety, when they say things like this in their formal ann.
"The Company has entered into Equity Swap Agreements with Lanstead which allows the Company to retain much of the economic interest in the Lanstead Subscription Shares****
The Equity Swap Agreement enables the Company to secure much of the potential upside arising from anticipated near term news flow."
****Only if the S.P. goes above .102 during the next 6 months!!!.
Why then, in this shocking market which looks like lingering maybe for months, after determining the price that Lanstead had to pay to seal the deal @ .0765, the "Benchmark Price" on which Lanstead had to ACTUALLY pay, was set @ .102.??
Lanstead already received a 10% fee for their trouble, but that "Benchmark Price", effective immediately, means that the 6 monthly payments for those shares will be determined by that "Benchmark Price" relative to the share price at that time (and they don't tell us how that is to be assessed-average over that month??)
As it commences immediately, IF the current SP persists during December (and in this shocking market for O&G shares what catalysts are there to raise the current price?) the price Lanstead pays would be at a discount of around 50% from that .102 "Benchmark Price", or 33% less than the initial agreed price.
How can the company support that the agreement will allow the company to secure much of the potential upside arising from anticipated near term news flow?
Unless there is something quite extraordinary (sealing those roads??) they are looking at only receiving as little as HALF of that $4,513,000 for 19.8% of the company, a market cap of not much more than $10 million??
Bigbillbrown, doesn't seem that Lanstead needs to worry about "shorting" the stock as they will only need the SP to be around 3.5 cents in 2 years time to cover their initial bet. Seems like Lanstead are the ones who will be "securing that potential upside".
Be interesting to see how much they do actually raise come end May 2015, even between, if HK continues to drill at a rapid rate in Birch to compensate for the low oil price to meet THEIR high debt costs. May have to get that LT loan signed sooner than later?
Birch is clearly a super asset, but, ironically, has probably been too successful and came too quickly for AKK's overall plans??!!
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