Does Borealis Exploration Limited (BOREF) really own 78% of Chorus Meshcon & WheelTug and will this ownership translate into an ongoing revenue stream should WheelTug's be profitable as they project?
Source: BOREF's 2013 annual report, page 38, "WheelTug plc is 83.90% owned by Chorus Motors plc, which is 77.95% owned by Borealis Exploration Limited."
83.9 % X 77.95% = 65.4% Ownership of WheelTug by Borealis.
Will this ownership translate into an ongoing revenue stream should WheelTug's be profitable as they project?
For the companies involved I believe over time they will make big bucks (if the FAA certifies it.).
I expect it to start very small (negative actually) but become be a long term cash cow.
For the stockholders I think so as well or I wouldn't be here.
The setup is complicated to the point I'm not convinced there isn't a gotcha somewhere.
For instance Andrew Tobias (MBA) considered the offer by Borealis to trade Borealis shares for WheelTug shares.
This offer is so bad (and so bizarre) it just adds to our little company’s delightful je ne sais quoi. WheelTug is owned mostly by its parent Chorus Motors which is owned mostly by its parent Borealis. According to this WheelTug page, Borealis owns 6,187,712 WheelTug shares (indirectly via its Chorus Motors subsidiary). There are 5 million Borealis shares (you, Jim, own 175 of them), so if all this is accurate, each Borealis share indirectly represents about 1.2 WheelTug shares. So in a sense, you currently “own” about 200 WheelTug shares. My math be off if I’m not reading the various websites right, but it’s something at least vaguely like this.
They are offering to exchange your current holding for 35 WheelTug shares. (Of that math, I am certain: you get one WheelTug share for each five BOREF shares, so 35 for 175.)
You’d go from an indirect ownership in about 200 shares to a direct ownership in 35 shares. And you would be giving up whatever other value Chorus Motors might have........ and ....other Borealis subsidiaries might have. All for a chance to own 35 WheelTug shares directly instead of 200 indirectly. "
Either the offer was aimed at the gullible or there is something he and I are missing completely.
That does worry me.
Those ownership numbers look accurate, and yes, portion of that revenue stream should accrue to Borealis.
Don't know what this current spike in price is all about, but it looks like someone wants a serious position and is willing to pay up for it. I've sold part of what is an oversized position into this spike to get me more comfortable.
Maybe this is going to turn out alright, but allow me to make a few observations that seem to be lost on more than a few folks:
1) potential buyers may find it revealing to review the Borealis prospectus that was recently published on their website. In it one will discover that Borealis is capitalized with 5M share with that being the maximum issued and approved, so all is well dilution to BOREF will only come with majority vote of at least 2/3rds of shareholders.
2) wheeltug and chorus motors are NOT directly held by Borealis Exploration. Instead, Borealis Exploration holds 98% of the shares of Borealis Technical which as I understand it holds the patent portfolio for Chorus Motors. 2% of Borealis Technical is held by the Borealis scientist who did the original Chorus motor development. Well, that all seems mostly ok, but it should be noted that this immediate subsidiary is capitalized with 100 shares currently issued (98 to BOREF), but they are approved for 2000(!) shares. Perhaps I'm mistaken but as I understand it, Borealis Technical can issue those 1900 shares at any time for any reason with just a vote from their 3 member board. Not that they would ever do anything crazy like give themselves each 10% stakes as incentive stock options or anything but still it makes you wonder.
3) of course I think the same thing about Chorus and Wheeltug. I presume that by the time that Wheel Tug is actually shipping product that for one reason or another they will have issued their maximum approved number of shares (each 10M), so one BOREF share will hold 98% (assuming that Borealis Technical doesn't decide to dilute itself by a factor of 20 by handing shares over to executives) of 1/4 of one share WheelTug.
4) But as for Wheeltug revenue actually accruing to BOREF, I don't understand why that would be. As I understand it, WheelTug is an incorporated subsidiary, so they or Chorus Motors could elect to retain any earnings. Yahoo won't let me make ths longer..oh wel
It might have something to do with the additional order.
Gibraltar, 9 October 2013 - WheelTug plc announced today the execution of a Slot Purchase Agreement with Malaysia Airline System Berhad (Malaysia Airlines) Airlines for 68 737NG Systems. With the new reservations the order book of WheelTug® aircraft drive systems grows to 641 delivery slots reserved by twelve airlines from Europe, America, the Middle East and Asia. Seven of those airlines are flag carriers.
Also they presented at the Smart airport conference last week 7-11 (Last day)
Basically just they are advertising.
Also I think you are right somebody is putting together a sizable position Hopefully there will be many somebody(s) doing the same. If not the price might not hold. Congratulations on making some cash on it.
Thank you for your assessment and response.
Sorry, no, I have no idea for the reason for this current spike in price. Maybe others who like Wheeltug's business model and are looking for a way to invest in WheelTug's future are finding BOREF is a publicly traded option. Unless they have big bucks and can afford direct private placement with WheelTug?
Whatever reason, I like it and believe as we continue toward WheelTug's projected early '15 deployment date more investors searching for a way to invest in WheelTug's environmentally friendly, cost savings, time saving, efficiency improving technology will find BOREF as their only publicly traded option?