If I'm reading this right (HIGHLY questionable), h
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Posted On: 06/15/2020 3:30:11 PM
If I'm reading this right (HIGHLY questionable), here's my take on the latest S1:
1 million preferred at $33/share, bringing $33 million to GNBT. Those shares then trade at market price between investors, so no impact on GNBT common other than there is a cash value to GNBT, so ideally the share price goes up.
For every 10 of the 1 million shares, the holder is issued a warrant for 1 share of GNBT common stock, with an exercisable price of $15/share. So there are 100,000 chances (1 million/10) to redeem up to 100,000 common shares at $15/share. So if each warrant is exercised (ie, GNBT stock price exceeds $15 per share within the next 2 years), GNBT could potentially raise $1.5 million (100,000 x $15) additional dollars. The total dilution to the common stock is 100,000 shares.
So here's a hypothetical...you buy 10 preferred shares for $33/share, $330. You have the right now to buy 1 share of GNBT at $15. If GNBT goes to $30 per share, you exercise that right and make a $15 profit on that one share ($30 pps - $15 warrant exercise price). You continue to hold the preferred shares, and you are earning 13% annually on their value (.13 x 330 = $42.90 per year).
After 2023, GNBT can buy back the preferred shares for $33/share + any unpaid dividend amount. So for 3 years, you are guaranteed a 13% return and a buyback at what you paid...or, if GNBT does not buy back the preferred shares, you continue to collect the 13% return until they do. If you haven't exercised the warrant within 2 years of your initial purchase of the preferred shares, you lose the ability to buy the one share of GNBT at $15. That would only happen IF GNBT's pps did not exceed $15 in that two year period.
Does anybody see this differently? This is what I'm reading into it, but I can't say definitively that this is what it means.
1 million preferred at $33/share, bringing $33 million to GNBT. Those shares then trade at market price between investors, so no impact on GNBT common other than there is a cash value to GNBT, so ideally the share price goes up.
For every 10 of the 1 million shares, the holder is issued a warrant for 1 share of GNBT common stock, with an exercisable price of $15/share. So there are 100,000 chances (1 million/10) to redeem up to 100,000 common shares at $15/share. So if each warrant is exercised (ie, GNBT stock price exceeds $15 per share within the next 2 years), GNBT could potentially raise $1.5 million (100,000 x $15) additional dollars. The total dilution to the common stock is 100,000 shares.
So here's a hypothetical...you buy 10 preferred shares for $33/share, $330. You have the right now to buy 1 share of GNBT at $15. If GNBT goes to $30 per share, you exercise that right and make a $15 profit on that one share ($30 pps - $15 warrant exercise price). You continue to hold the preferred shares, and you are earning 13% annually on their value (.13 x 330 = $42.90 per year).
After 2023, GNBT can buy back the preferred shares for $33/share + any unpaid dividend amount. So for 3 years, you are guaranteed a 13% return and a buyback at what you paid...or, if GNBT does not buy back the preferred shares, you continue to collect the 13% return until they do. If you haven't exercised the warrant within 2 years of your initial purchase of the preferred shares, you lose the ability to buy the one share of GNBT at $15. That would only happen IF GNBT's pps did not exceed $15 in that two year period.
Does anybody see this differently? This is what I'm reading into it, but I can't say definitively that this is what it means.
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