I hold both FEX and CZR with a much larger holding in FEX. I think this is a pretty average deal for Fenix. Without this offer, CZR had major dilution concerns with limited funds, the FIRB wasn't moving and it had already been a year. Fenix is extremely undervalued ramping up from 1.5Mtpa to 4Mtpa without CZR. Once that full production hits the books its going to be worth a considerable amount more.
Instead of existing FEX shareholders maintaining their respective share of the company and seeing their shares increase in value, this growth is now going to be shared with CZR shares.
Long term I can see the benefits for the merge, but I believe given more time, FEX would have rerated on increased profitability and CZR most likely would have been diluted and stuck in negotiations for another year. I think FEX could have got a much better deal as time passed. More money will be hitting the balance sheet and the share price was slowly rerating, wouldn't call it a pump.
While you may be taking the position that the current deal undervalues your CZR holdings, I strongly believe this will result in a much better long term gain than the original deal for CZR. You will now be getting the upside of everything FEX has achieved + watching RM go into production. The combined entity when producing over 10Mtpa should be worth a lot more than the combined $250-300m market cap.
CZR Price at posting:
24.0¢ Sentiment: Hold Disclosure: Held
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