Proteomics bought 112397 shares in CPR that represented 10% of the company. It did this not with cash but gave CPR 3,868,305 shares in PIQ that were escrowed (not able to be traded) until 4/3/2019. At the time of the deal the Proteomics shares were trading around 30 to 31 cents and you will see that they had a deemed price of $0.3045 per share. These shares dilute our holdings in the business but as long as there is good intrinsic value in the deal then the rest of the shareholders are no worse off and if the deal is a corker then we are all much better off.
Bottom line is the company has issued 3,868,305 shares that at the time of issue had an estimated value of $1,177,898 (see pg 52 of the annual report for the entry into the companies capital on 8 March 2018). The shares that were acquired have now been compulsory acquired by another party that has bought CPR. We know that PIQ had a 10% stake and that the cash that we will receive is $928,399 so the total value of the CPR business was $9,283,990. We now know that when PIQ took its stake in CPR there was an agreement that included the provision that should someone want to buy the CPR company then the 10% stake that PIQ had could not be used to block the deal (drag along provisions).
Not sure I have made it that much clearer for you but hope that helps.
As an aside, had PIQ issued the 3,868,305 shares at a different time when they were say at 20 cents per share then they would have had an implied value of $773,661 and PIQ would have booked a $154,738 profit on the deal. It is just an accounting entry until you get the cash.
PIQ Price at posting:
26.0¢ Sentiment: Buy Disclosure: Held
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