thevet, you're right. It is a substantial sum of money to put down without a fair chance of success, but on the other hand, someone presumably sold 10 million shares thinking the opposite. Unless the shares were moved from one fund to another buy the institutional owner.
One of the good things about owning GRZ instead of KRY is not reading the KRY message board. One of the bad things about owning GRZ is reading the GRZ message board.
A big factor in VZ's willingness to delay is the very low interest rate the ICSID assigned to the award - LIBOR plus 2% - compounded annually, no less. That's nothing. VZ has almost no incentive to get this done. They can afford to pursue every legal avenue, virtually without penalty.
I don't know how valid or frivilous their argument is, but when you're on the hook for $740m, you're going to throw heaps of poo against the wall hoping something sticks.
I was hoping more financing wouldn't be needed. VZ is waiting as long as possible to resolve this, probably not until the inevitability of default or confiscation of their oil money is a guarantee.
Put into perspective, though, the $12.3 million financing is less than the accrued interest on non-payment of the award thus far.
About the agreement you mentioned, adam. An agreement was signed "encouraging the development of new sources of foreign revenue".
I'm not sure what that means but it sounds more like a commitment within the VZ government to exploit than it does a signing a contract with a foreign country to build a mine.
The stock recently went from over $1 per share to $.70 per share. A 30% loss in a few trading days. That's all that matters.
And with gold in a bear market, the longer they wait, the less they'll have to pay (assuming they even want it - everyone assumes they do).
The numbers just aren't there to support a $10 share price. Even if VZ wrote a check for $740 million, it would result in someting well under $10 per share. Still, share holders will only get a substantial portion of whatever is collected.
$740 million divided by 95 million shares translates into $7.80. Take out taxes, employee retention bonuses, etc, and you're closer to $6 per share. Then figure out what a "substantial portion" of that is.
Realize, too, that after any award is distributed, the value of the shares we hold should drop since the current share price is buoyed by the impending award.
But in MUX's case, there are only 273 million shares outstanding. A 1:5 split would reduce that to under 55 million shares. I think that would be a very attractive statistic for anyone running a stock screener.
Another "but". Reverse splits are generally always seen as negative. It's like putting lipstick on a pig. In this case, though, we don't have a pig.