Bond holders locking in their profits on warrantsManagement should not have issued warrants > Big blunder, dilutive and not shareholder-friendly.
"Athabasca Oil Corp. has arranged a private placement offering of 350,000 units. Each unit will consist of $1,000 principal amount of senior secured second lien notes due 2026 which bear interest at 9.75 per cent per annum and one five-year warrant to purchase 227 common shares at an exercise price of 94.41 cents per warrant share (representing the five-day volume-weighted average trading price of the company's common shares on the Toronto Stock Exchange ended Oct. 6):
The average selling price for the new large short position was $1.27 the noteholders shorted the shares and locked in their profit on warrants at an exercise price of 94.41 cents. and will also earn a very fat interest of 9.75%. Noteholders are making a killing and this is thanks to the management. I have seen this in the past too where companies are very desperate or have poor management that allows this kind of situation where they are paying big interest and at this same time allowing risk-free profit-taking on warrants.
On Friday there was huge volume and the stock tanked there is a chance that the short may have increased. We will find in that in the next report.