I think we have left out a very important componen
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Posted On: 05/20/2021 2:09:38 PM
I think we have left out a very important component of the conversation so far on the Class A/B discussion.
The IPO is for ~5.5-6.3MM shares. If DJ takes their option for extra shares and BOTH sets of warrants are exercised, that may yield a whopping total of ~20MM shares.
If we presume there is interest in NGIO, that is an absurdly low amount of shares.
For discussion purposes, I’ll make some assumptions and exaggerations here...
Let’s look at a worst case for the Class A shares and say the market initially chooses to ignore them. If the value of NGIO is perceived to be $500MM, these 20MM shares would, in theory, trade for $25/sh.
Now any intelligent person who looks at this scenario is going to say, “Wait a second! These Class A shares are trading on OTC for $X/sh (presumably way below that $25/sh).” A quick look, and they can see the risk of Class A vs Class B:
1). Class A is behind Class B’s $11/share redemption if we go bankrupt.
2). The conversion rate of shares.
3). Naz vs OTC.
They can also do some research and see that the controlling company that holds the voting rights and its CEO also hold shares of Class A. This isn’t some abandoned class that is going to be hung out to dry. So this can be seen as mitigating factors to these risks.
Meanwhile, the investors who bought at $25 say, “Holy crap! Look at all these other shares out here that actually control the voting (directly or indirectly w the super voting shares)” and realize they can take on some additional/reasonable risk and own vastly more shares.
People start to realize there is an arbitrage opportunity, and the gap between the share prices starts to close.
The smaller that gap gets, the smaller the conversion risk becomes, and maybe we have a self-fulfilling move to $4+ on the Class A shares, and we convert.
As Balleroni so astutely stated, maybe this is a master stroke by Joe to sabotage the saboteurs. It seems to be a creative maneuver against a nefarious move. And if it saves the whole deal from purgatory or failure, it will be worth seeing this through to the conversion.
The IPO is for ~5.5-6.3MM shares. If DJ takes their option for extra shares and BOTH sets of warrants are exercised, that may yield a whopping total of ~20MM shares.
If we presume there is interest in NGIO, that is an absurdly low amount of shares.
For discussion purposes, I’ll make some assumptions and exaggerations here...
Let’s look at a worst case for the Class A shares and say the market initially chooses to ignore them. If the value of NGIO is perceived to be $500MM, these 20MM shares would, in theory, trade for $25/sh.
Now any intelligent person who looks at this scenario is going to say, “Wait a second! These Class A shares are trading on OTC for $X/sh (presumably way below that $25/sh).” A quick look, and they can see the risk of Class A vs Class B:
1). Class A is behind Class B’s $11/share redemption if we go bankrupt.
2). The conversion rate of shares.
3). Naz vs OTC.
They can also do some research and see that the controlling company that holds the voting rights and its CEO also hold shares of Class A. This isn’t some abandoned class that is going to be hung out to dry. So this can be seen as mitigating factors to these risks.
Meanwhile, the investors who bought at $25 say, “Holy crap! Look at all these other shares out here that actually control the voting (directly or indirectly w the super voting shares)” and realize they can take on some additional/reasonable risk and own vastly more shares.
People start to realize there is an arbitrage opportunity, and the gap between the share prices starts to close.
The smaller that gap gets, the smaller the conversion risk becomes, and maybe we have a self-fulfilling move to $4+ on the Class A shares, and we convert.
As Balleroni so astutely stated, maybe this is a master stroke by Joe to sabotage the saboteurs. It seems to be a creative maneuver against a nefarious move. And if it saves the whole deal from purgatory or failure, it will be worth seeing this through to the conversion.
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