Racquet364,

We are all guessing as to what will happen with the remainder of the concessions if there is a takeover of ARU/FDN. I suspect that the majority would like an all cash offer with the remainder of the properties spun off as ARU2 (or some such company). That way we can do with the cash as we wish and get in on the bottom floor of the next ARU play.

Most of the funds and arbitrage guys would prefer a cash offer as it gives them greater flexibility to rebalance their portfolios or 'take it and run'. Unfortunately I don't think anyone expects it to go that way. If we go for the $5 billion or so valuation that people guesstimate, that’s a lot of cash to raise and it’s much cheaper for a major to pay for us with stock that dilutes their shareholders and a cash teaser. The exception would be someone like the Chinese that know they would have to make an all cash offer to work around foreign ownership issues.

The spin off of FDN as a takeover is more controversial. Many point to companies that have spun off their exploration properties in preparation for a takeover. I would like this to happen but I don't think it will. To do this would require the action to be taken before an offer was made and to have it approved by the shareholders. I don't see any evidence that this is happening. Once a single bid is made it will be a frenzy of activity coming from multiple bidders and at that point any further changes to the corporate structure will be wishful thinking unless it’s the sweetener that a bidder throws in at the last moment to make their bid more appealing. The institutional bidders, Bidders, lawyers, and speculators are not going to let ARU throw a wrench into a $5 billion dollar deal over the spin off of a $100 million junior that might have another deposit on it. Now if there is a significant secondary discovery made there might be enough pressure to have a spin off company but even that would be unlikely.

So if ARU is considering a spin-off now would be the time to do it so that they control the agenda. I'd send them my proxy to go ahead with a spin-off company. On the other hand if they wait for the first bid I don't see how a spin off could happen.

We can always hope it happens.

… Been There