Yes the operations of Zenith can carry on as it stands but I believe it will require financing to enter into phase 1. Seeing as any financing will be dilutive then, as it stands, current shareholders ownership of the RVX preferreds will also be diluted. I think this is the main thrust of this reorganization, prevent dilution of the RVX preferreds ownership.
To me it would be nice to know more, before voting, on what type of financing is going to occur. I have been around the RVX/Zenith story for a long time now and although I haven't always agreed with management I do believe that everything they have done from a financial/ownership perspective has always been fair to ALL shareholders and that Don has always fulfilled his responsibility to protect all shareholders. I guess the tale of the tape will be that if, post transaction, an insider led financing occurs that favours those involved in the financing then smaller shareholders will have been screwed. My inclination is that this will likely not happen.
I did get the same response from Sarah as everyone else even though my question was regarding the thought behind the relative valuations of current Zenith assets. After more thought though I think once there are two companies Don can proceed with trying to get the best financing deal he can based purely on the IP of the operating business. Probably a party interested in infesting in the IP would want to severely discount the value of the RVX preferreds so from that perspective this arrangement makes good sense to me.
