last I heard, Grupo will not get far appealing the 1.9 billion. Our SCCo attorneys are challenging the 285M on grounds that it pays the lawfirm 32k/hr[ten times the rates usually awarded to top flight firms] for their 9k hours of work. I assume the nine thousand hours includes paralegal time as well. This is something we should be interested in, or go back to law school.
Since Grupo must transfer money from one internal aspect to another, we will probably see them take it out the side door anyway.
It is a double edged instrument. The fee to the legal firms is hefty, it also means that there is a body of minority shareholders who have now established a record of discipline with the board of directors and it will be costly to act against the interests of the shareholders. If you ask me, I think we paid 200million too much for our representation. It is like the law firms just got a dividend for every share,of $.33 840,000,000 shares. It is way beyond what they risked by taking on this case.
It will be hard for grupo to take 1.9 billion out the back door because related party transactions have to be disclosed, the prices must be arms-length (at least as favorable to scco as from a third party), and enough smart people are watching.
Before this stock dividend, which will not change ownership percentages because it is proportionate, grupo owns 680 million out of 841 million or 80.86%.
If grupo repays to scco the 1.9 billion with shares of scco, at 36 per share, it will cost grupo about 52.8 million shares, leaving grupo with 627.2 million out of 788.2 then outstanding (841.0 - 52.8), leaving grupo with 79.6%. You can bet this will not happen. Grupo will pay enough cash so they will be left with at least 80% of the after-payback stock.
As for us, the market cap with 841 million out at 36 per share = 30.276 billion. Take the same market cap and divide by 788.2 million shares = 38.41 per share.
I agree, the attorney award is outrageous. But even if paid as is, we non-grupo shareholders still come out a 2 bucks per share winner.
Good reply. I agree that side door transactions are now much more difficult to arrange. If Grupo did this right, they could look like good guys and enhance stockholder value. Thanks for the quality of your posts.