Veris Gold Update

As you know I wrote about why I sold all of my shares in Veris Gold. However, because the company released the news about defaulting on the Deutsche Bank loan, I am receiving a lot of email about doing an update. Here is what I think will happen. Whether the stock price will increase or decrease from here will depend on the number of shares printed.

The loan will get worked out. Either Deutsche Bank will sell the $80 million loan to someone else at a deep discount because now the loan is in default or the major shareholders restructure it. But then there is another $50 million of liabilities. How do they get restructured? If it is all equity, then the company will need to print 500 million shares at $0.10 per share plus 250 million of warrants. This would mean that the total number of shares would go back to 1 billion.

Now depending on what you think that company is worth, you can take your estimate and divide it by the number of shares.

$1 billion/1 billion shares = $1 per share

$500 million/1 billion shares = $0.50 per share

$100 million/1 billion shares = $0.10 per share

I don’t know if they are planning on printing this many shares, but I just don’t see a scenario without more equity. It is just a matter of how much and at what price.

 Disclosure: None

2 Comments to Veris Gold Update

  1. DL's Gravatar DL
    January 30, 2014 at 11:20 am | Permalink

    Mariusz,

    Once the DB loan gets sold to new investor and restructured to longer term, I can’t see why the company can’t take on another $30 million dollars of unsecured debt (perhaps convertible).

    Note that I think the company will need to issue stock (10%-20%) to compensate new lender for the restructure.

  2. G.'s Gravatar G.
    February 18, 2014 at 8:38 am | Permalink

    Creation of Restructuring Special Committee and Appointment of Raymond James as Financial Advisor:

    http://online.wsj.com/article/PR-CO-20140129-913975.html

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