ALFA, a major Mexican conglomerate, announced in May that it had acquired 31,437,700 shares of Pacific Rubiales Energy Corp. (PRE.to), representing 10% of the company. This purchase was made at $18.43 per share, which was considered a low price at that time for PRE.
In August, ALFA revealed that it purchased an additional 9 million shares of PRE.to at $21 each, increasing its total stake to 17%.
The exact amount spent by ALFA on its PRE.to shares is unclear, but Canadian regulatory filings indicate that from May 20 to August 20, ALFA paid an average of $21.03 per share, totaling around $489 million.
At that time, the outlook was promising. The combined 53,657,900 shares closed at $21.65 each, giving a total market value of C$1,162 million.
Here’s how the price has changed since then:
Currently priced at $17.88, this decrease translates to a paper loss of $200 million on ALFA’s shares since the press announcement on Aug. 20. (From $1,162 million down to $961 million. You can check my math, I might not be the best at numbers!)
I’m not a trading expert by any means, but I’ve got a theory about this.