GREY:ALEAF - Post by User
Comment by
rad10on Dec 18, 2020 4:43pm
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Post# 32142500
RE:RE:Convertible Debentures
RE:RE:Convertible DebenturesSincity
It's the spirit of Christmas so I'll play nice (and act as though I derive no schadenfreude from the mean girls clique ;-).
https://leedejonesgable.com/wp-content/uploads/emblem-180129.pdf
70% of the outstanding Emblem liability is held by a single entity. A holder who generously waived the change of control provision at the bottom of page 20 for the Aleafia takeover.
A typical dilution liability would be as follows:
(outstanding balance / 90% of (7 day VWAP) share price). Please note the prospectus does NOT contain this option. This would be subject to negotiation with the biggest holder if they can't or are unwilling to make the full redemption payment in cash 6 weeks from now. Method can confirm this.
If they take this nuclear option - the BEST case scenario is 56 million new shares, assuming no further cratering of the share price. That's a massive assumption. They may choose to do another unexpected independent capital raise to pay it off - similar to what we all saw in May.
Another option is to renegotiate the term with the debenture holder. Kick the maturity date down the road. These deals typically increase the coupon, include warrants and / or lower the equity conversion price.
I think they will just pay it off - and thats why I rebought some of the listed debentures at 60 and change.
Debentures are fun. The devil is in the details.
Grab your popcorn & Happy investing!
N.B. insiders own less than 3.5% of the shares in this company.