Nothing is more telling than an analysis of the possible motivations of all players in this merger. I believe Cashken's final point is the critical one so I'll expand on it if I may:
a) VIL is a company with 99% of it's current potential locked up in FP. If FP doesn't hold significant value then VIL is largely worthless as it stands (pre merger). Lets not bother debating what Bongo devided by 1 billion shares equates to.
b) PASS fully understand that VIL has all its eggs in one basket. They also understand that VIL has cash flow issues and has done numerous capital raising recently but still has only minor cash reserves.
c) Being a current JV partner in FP, PASS is fully aware of what is actually going on at FP, what has been found and probably what is really down that hole and under surrounding land. They must also know the real reasons for the delays and what is going on in the background.
d)PASS shareholders are willing to swap income producing assets, a bunch of prospects and their stake in FP to hold VIL shares.
Since PASS and it's small number of shareholders presumably know more than you and I about our primary asset they surely know that if FP is a dud then they are giving up both actual cash producing assets and diverse prospects and getting nothing more than a bunch of shares in nothing. Why would they do this unless they thought FP was huge ?
Sure they would be getting shares in a listed company thus finally allowing some of them to liquidate however if FP doesn't live up to expectations then they won't get much even if they do finally have listed stock to trade.
Either way, all of this is great for VIL shareholders because if FP was a dud we are really exchanging a part of VILs share of FP for lots of other assets.
It's hard to see any downside for VIL shareholders however as I believe it's reasonable to assume PASS shareholders have more direct access to information about the goings on at FP then we do, any vote of a merger should be preceded by two things IMO:
a) Complete explosure of the exact findings and plan for FP so there is no risk of insider trading during or post the merger.
b) Who the majority holders would be in the combined entity. Don't need any nasty surprises when it suddenly emerges that one beneficial holder controls the merged entity through consolidation of various holdings across both entities.
Still, even including conspiracy theories, all roads would appear to lead to a better place for VIL and it's shareholders.
VIL Price at posting:
2.4¢ Sentiment: Buy Disclosure: Held
