RE:RE:RE:RE:RE:RE:RE:RE:Smart Management Exactly same as equity raise if you use up all the cash to repay debt. Anyway, 100% will convert if share price stays above 1.25. You either get $1,000 or 800 shares to sell in the market. Selling 800 shares at 1.26 will give you 1,008. Who would not convert? Short sellers could try to dip it below 1.25 in order to make company hold more debt, and those who are long will buy below 1.25 with current oil price strengthening. I doubt the insider is more interested in 8% or 10% to 12% annual interest, when the share price was rising ~5% per day recently. Insider holding more than 17% would want the share price to go up than to earn 8 to 12% interest on 20 million.
sclarda wrote: 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.