RE:RE:RE:RE:RE:RE:RE:Smart Management giovinco
Rational is to get rid of the 1.25 option to convert snce price crossed the mark. Not sure if it was good timing since stock price was taking off. It is same as equity raising at 1.25.
All will convert as long as market price is above 1.25 and some will sell right away causing share price to be stuck for a short term. i.e. short the stock now and then convert at 1.25 or sell what they have already and convert at 1.25 to be at the same net risk exposure
Selling pressure will cause the share price to be stall before taking off again.
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Its not really like an equity raise via a private placement at $1.25 as CJ does not get any cash from debenture conversions and has to pay out the cash instead for those who dont want to convert which will be payed out by the new notes which are a new debt for the company .
The main advantage is if a lot or all convert the $28 million in Debenture debt will be converted into shares and the debt will disappear at the cost of aprox. 20% dillution of CJs shares. If the shares are not converted the debt will be transferred to insiders at higher intrest rates.
At least insiders are showing confidence in CJ.