RE:RE:RE:RE:Stock Options This very interesting and somewhat unusual action. One thing sure, there is should be a reason.
- The options are unreasonably expensive (s/h sure the price won't be achieved), but due rules, it affect P/E ratio.
$2.42 is not too expensive considering that it is 2.5 years away and Li market both. Now Li is cheap due to oversupply, but trend is uncertain (production cut meets demand increase) can either balance the market or even cause deficit. Many other things can happen, such as financing - how market will react? Also, Conacord price is 2.50 for 2021 and they they used NPV rate 11% with note that it can drop (if EIA accepted or financing achieve), which can bring pricing to $3.
At the same time, there is no Earnings, so P/E is irrelevant.
Thus it would be smarter to just wait until 2023 and options would just naturally expire.
2. Pre-sale activity. The potential partner want to contribute say 100m for 50% (which say 120M shares) but options are included and messing some numbers, or plans.
Possible, since these options are much higher price than today's one, there is possibility, say 50% that they won't reach 2.42 and had to be cancelled later. Than, the Partner will have 120M shares and it would give the Partner 53% votes, which is control over JV.
3. The options are cancelled because management want better compensation. They may claim that $2.42 was under assumption no oversupply. Even if shares are at $4, it would not be what they feel deserved. Than this is step one - cancellation and we will soon see new options issued at much cheaper prices.
This would guarantee that NLC is under management control and management get higher compensation. Issuing new options first or replacing old would not look good.