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With the recent news release titled, “SEC Receives Complaints From 432 Investors Filed Against Hycroft Mining Holding Corp HYMC And Former CFO Stephen Jones”, covered on TV news stations and other media outlets throughout the United States and Canada, it may only be a matter of time before the SEC investigates why management wrote off more than 1/2 of a billion dollars of stockholders’ equity in assets that currently remain with the company until today.
A total of $608,985,000 in secondary offerings were granted to current Hycroft Mining (HYMC) management by the previous Allied Nevada shareholders, prior to the name of the company being changed to Hycroft Mining Holding Corp.
|Year||Month||No. of Shares||Currency||Price||Total (NYSEARCA:USD)|
|This does not take into account the initial public offering of 38,869,000 shares on Sep. 14, 2006.|
When Allied Nevada filed for bankruptcy in March of 2015, investors received warrants that were issued under the symbol HYCTW, and then approximately five years later, on September 1, 2020, these warrants were listed on the Nasdaq under the ticker symbol HYMCZ.
Current State of Affairs
After years of waiting to receive relief, investors are now being told that they must hand over even more capital and to the same individuals responsible for extinguishing their prior shares. In order to receive a single share, investors must pay a blatantly outrageous strike price of $44.82 and give up 3.96 warrants, wiping out approximately 75% of investor warrants and leaving investors over $30 out-of-the-money, effectively deeming their 608 million dollar investment worthless, when these warrants were originally meant to serve as a relief package to investors for handing over such a large amount of capital.
Hycroft Requires an Additional $143 million from Allied Nevada Gold Corp Investors
With the strike price and conversion numbers provided, as shown in the latest prospectus released on September 8, 2020, Hycroft is requiring an additional massive $143 million dollars from warrant holders.
3,210,213 shares * 44.82 strike price = $143,881,746
For this same, $44.82, that gives investors the right to receive only one share, the public can currently purchase, on the open market, as of October 6, 2020, about 6 HYMC shares, an outright insult to investors.
Investors are unanimous
A group consensus among warrant holders reveals that investors unanimously believe that the company’s intention was not to raise an additional $143 million dollars from warrant holders. Instead, investors believe, based on the company’s actions, and the information exposed in the recently published 29 chapter book sent to the SEC on September 21, 2020, titled, “Management’s Plan to Take the Hycroft Mine From Shareholders”, that the company directors simply wanted these warrants to expire worthless so that directors, along with the hedge funds, and other stakeholders, would not be diluted by these warrants.
Investors are outraged that the company continues to mistreat warrant holders, and in response, state the following on the opening page of the book:
“This book was written to put an immediate stop to management’s plan by putting them in the spotlight for what they have done. It was specifically written to get the attention of the Securities and Exchange Commission, and other regulatory agencies needed in order to enforce warrant holder rights.”
Warrant holders could not help but question, “How is it possible that prior to the 1/2 of a billion dollar write off, shareholders held 100% of the company, but then afterwards, these same shareholders held 0%, and all equity was transferred to the hedge funds, who currently hold 90.96% as of the recent news release dated September 29, 2020, when the company, today, continues to possess these valuable assets that were written off?”
Shareholders were left scratching their heads, wondering how such a large transfer of wealth could be taken from one class and given to another class almost overnight, as investors watched helplessly as their shares were extinguished.
Will the 29 chapter book and the recent media attention be enough to cause the SEC to open an investigation into this matter? If so, Allied Nevada shareholders, the current HYMCZ warrant holders, may be on track to soon receive the relief that they have been patiently waiting for the past five years.
Our recommendation on Hycroft Mining Holding Corp HYMC
Based on the information contained in this article, our recommendation for investing in Hycroft Mining Holding Corp HYMC is to remain cautious until the above mentioned matter with HYMCZ warrant holders is resolved.
To receive the latest information regarding these warrants:
To download the book:
Links to the recently published news release mentioned in this article are available at the following TV news channel websites:
Disclosure: I am/we are long HYCTW. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: The author of this article was responsible for compiling and editing the above mentioned book and is one of the 447 people listed in Chapter 29. The author is not one of the anonymous researchers.
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.