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Venoco, Inc. Message Board

  • waywol waywol May 25, 2012 1:30 PM Flag

    Deal Likely To Go

    No doubt the market is skeptical, given the price action, class suits, etc. But Tim has a long history of getting it done and shareholders (institutions) will want to take the premium, so vote should be a yes.
    Consider: 1.Tim's in a "quiet period" and wouldn't talk anyway cuz he doesn't want the price going up - best defense on suits is "well if my offer is so undervalued, why is the stock at $9??"
    2. A yes vote will see the price pop - then we await word on financing - Tim will get it done, or personally pay a break up fee. Motivation!
    3. Will be some hangover on suits, but if shareholders approve, what argument do the ambulance chasing, gutter dwelling lawyers have that the offer is too low?
    4. IF the vote is a no, it'd be because investors think the stock's worth more - so it should not tank. Let's remember it was trading in the $20's!
    5. VQ doesn't have as many fracking issues as others. Their oil is also tied more to Brent than WTI.

    This is the time to BUY LOW. Sep $12.50 calls are 10 cents! If the deal goes thru at $12.50, 10 calls at $100 will be worth $12,500! Good luck to all!

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    • The problem isn’t the class action lawsuits or the shareholder vote. The lawsuits are standard and they either get thrown out or they reach a settlement in which the lawyers get paid and the shareholders get “additional disclosures.” The shareholder vote should be automatic. The problem is that the financing is still not in place and the market is only getting worse making it increasingly less likely that it will be secured.

      Also, your $12.50 call options will be worth $0.00 if the buyout goes through, not $12,500. Buying the $12.50 calls is actually making a bet that the buyout won’t happen.

    • I think you are misunderstanding the way calls work. If the deal goes through, the 12.50 calls will be worth zero.

      I agree that the likelihood of this going through is >50%, making VQ a fairly attractive risk/reward at the current price.

      • 1 Reply to kamchatkatravel
      • Yes, exactly. Anyone buying the $12.50 calls is a real riverboat gambler, since the only way to make money owning them is if the deal falls through and VQ's stock rises to above $12.60 by September (rather than tanking to about $7, which is likely if the deal falls through, which is a strong possibility). Of course, perhaps some other bidder could come along by September and offer more than $12.60 for the company, but that is a REAL long-shot.

        The pricing of the September $10 calls, at the last trade price of $1.25, suggests that call buyers and sellers think that it's a 50-50 bet on the $12.50 buyout occurring. If it does, you make $1.25, if not, you lose the $1.25 you paid for the calls (ignoring commissions). Personally, I decided to hedge part of my position, by selling the September $10 calls at $1.80 back in early March, as I began to have more doubts about the buyout.

        Place your bets, ladies and gentlemen, and buckle up.