arcan results, page-5

Murdochjak,

That idea might work (buying bonds at 50% below market) except that it would be hard to buy 50M or so of bonds and not move the price back up. It's too illiquid a market.

I think that's why a merger is a better move. Plus ARN's current management is getting it done (unlike the old team) and our management and BOD are incompetent.

I did the following computation as a worst case for ARN without any boost from a merger. This is from the investorvillage ARN board attached below.

Wiggling

"I wonder. Suppose ARN did convert the 171M in convertibles to equity. Let's say at 0.30 (Note: I do not want to see this happen but this is a hypothetical).

That means issuing 570M more shares for a grand total of 670M shares. Total 1P value is around 400M while 2P value is 582M. Remaining bank debt is 160M.

So you'd have 1P value of (400-160)/670 ~ 0.35 a share.

Or you'd have 2P value of ~ 0.62 a share.

You would have a debt to cash flow ratio that was still high. Now suppose they reduce debt by 100M again by issuing shares at 0.30 (this would be a disaster but let's see). The total share count would be 1B.

The 1P value would be (400-60)/1000 ~ 0.34 a share while the 2P value would be (570-60)/1000~0.51. So we are trading below this horrific case valuation.

The resulting company would have a very reasonable debt/cash flow ratio for a light oil producer with stable production. It could grow and even pay a small dividend.

Let me stress that this is not the way I want the debt issue to be resolved. It can be resolved in a much better way for shareholders.

Wiggling"