In February of 2021, Camber Energy Inc (NYSEAMERICAN: CEI) and Viking Energy Group Inc (OTCMKTS: VKIN) announced a coming merger. The merger was great news. Camber already owned the majority of Viking Energy and considering the synergies and growth of Viking, the merger was sure to bring CEI to the next level. It was great for Viking too. Through the merger, the OTC stock would find its way to a major exchange – opening the door to fundraising opportunities nonexistent on the OTC. Things were looking up.
That is, until the United States Securities and Exchange Commission (SEC) had questions about Series C Preferred Shares. In a nutshell, these shares were somewhat toxic. They gave the holders the ability to dilute the stock heavily – something that’s never good news for shareholders.
So, if Series C Preferred Shares set the stage for heavy dilution, why am I even talking about CEI? Well, the times are changing and the opportunity is quickly becoming one that I believe is hard to ignore.
Toxicity Is Largely Alleviated & the Merger Is Likely Ahead
If there’s one thing I want to get across in this article, it’s simple:
The dark cloud that’s been hanging over the Camber Energy/Viking Energy merger for about a year and a half has dissipated, setting the stage for bright sunny skies ahead.
As mentioned above, the merger between Camber Energy and Viking Energy had been delayed as the result of shares that seemingly amounted to convertible debt with no floor. That’s painful, but that seems to be over.
Well over 90% of the shares that halted the merger and threatened dilution have been taken off the books since the announcement of the acquisition. As a result, significant dilution seems to be a thing of the past for Camber and I’d be surprised if the merger didn’t go through in the next few months.
What Does All This Mean for the Stock?
This is where things get very interesting in my humble opinion. Camber hasn’t had the best of times in the market through the delay of the merger and the dilution that followed in an effort to get out from under the toxic shares, for lack of a better way of saying it. YTD, the stock is down over 35% and over the past year, it’s given up more than 90% of its value.
However, this has the potential to be a good thing.
Essentially, CEI’s merger delay and subsequent shedding of relatively toxic shares resulted in the stock’s value divebombing – creating a significant undervaluation. Over the past year and a half, a dark cloud hung over the stock, keeping CEI down and striking fear in investors – investors who continuously fled the ticker.
Now, we have a situation where the company is nearly ready to close a transformative acquisition, but it’s still trading as if it never worked to get rid of those toxic shares. That creates an opportunity.
The way I see it, when the public realizes the work CEI has done and the fact that the Viking merger is likely to close ahead, the stock is likely to push toward a more reasonable valuation – meaning significant growth could be ahead.
Why This Merger Is Important
The merger between Camber and Viking brings significant value to Camber shareholders. That’s because much of the company’s value is already derived from its majority ownership in Viking. Combining the two companies only makes sense. But what exactly is Viking and where does that value come from?
Viking Energy has four divisions:
- Power Solutions & Clean Energy. Viking Energy’s majority-owned subsidiary, Simson-Maxwell, Ltd. is a leading manufacturer and supplier of power generation products, services, and custom energy solutions. The company has been operating for more than 80 years and currently services over 4,000 maintenance contracts.
- Waste Treatment System Using Ozone. Viking also owns a cleaner, more sustainable way to get rid of waste for clients like laboratories, hospitals, and the military.
- Open Conductor Detection Technology. Viking Protection Systems, LLC and Viking Sentinel Technology, LLC, two majority-owned subsidiaries of Viking Energy Group, own the intellectual property rights to fully developed, patent-pending, ready-for-market proprietary Electrical Transmission and Distribution Open Conductor Detection Systems.
- Resources. Finally, Viking, through majority-owned subsidiaries, owns interests in oil and gas resources in the U.S..
The Bottom Line
The bottom line here is simple. Camber Energy has been battered in the market over the past year and a half or so. However, the dark clouds are becoming a thing of the past and it seems as though brighter skies are ahead as the heavy dilution weighing on the stock has largely been lifted the merger between Camber and Viking finally seems to be coming to a close.
Disclosure: CNA Finance is not an investment advisor or broker-dealer. This article was written by Joshua Rodriguez and expresses his personal opinion of Camber Energy but should not be construed as a solicitation to buy, sell, or otherwise trade any specific security. This is a sponsored article and should not be considered investment advice. Investing comes with risk and CNA Finance strongly advises investors to seek advice from licensed professionals before making any investment decisions.