Does anyone really think that Weiss Asset Management would want over 17 million shares at 1.15-1.16 per share, having to hold them for 3 and 4 months respectively from today's date, if they would only be worth sub $1 by then. They would not risk that much if they did not think the shares will be worth more than 1.15-1.16 per share in 3-4 months, imo. Do USA investors get the tax benefit for the flow through shares? Please share some thoughts.
In the past, I recall that the exploration shares were not eligible for sale in the US. These seem a bit different, in that they say, "The shares will be registered in the United States for resale on the NYSE MKT via a resale prospectus supplement to the Company's shelf registration statement on Form F-10. Resales in Canada will be restricted for four months."
They are registered in US and can be sold but US holders do not get any tax benefits - only the original Canadian holders after 4 months. FT shares work like this
- buyer gets a deduction for full value of shares
- buyer cost basis becomes 0
- when sold (if held long enough) you get LT cap gain rate
- company must spend money on E/D within 24 months
- company does not get deduction for those E/D expenses so usually used when company is losing money.
(has a side effect of lowering loses)
So even if stock goes nowhere you get the diff between LT ans ST tax rates. Of course you are at risk.
Shares are often put in an private LLP by the original buyer and remarketed to smaller investors. That may be where Weiss comes in.
Google - flow through shares - many articles and explanations.
I have no idea how it works but I know that Weiss Asset Management can use or protect these 17M shares by hedging somehow their position.
They can short at 1.16 or 1.15 (directly or by option) or both but also manipulate the pps the way they see fit. Generally an equity deal like that, is mostly a negative for pps but in this case I did not see much of a downside so far?
This new 17M shares added to actual outstanding put the shares account to 195M shares and a market cap at 230M dollars for the whole Company.
What would you do if you had this amount of shares in you account "delivered" in 3 or 4 months?