GREY:ZMSPF - Post by User
Post by
schelbibbeson Dec 25, 2019 5:24am
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Post# 30489605
you will be extreme screwed one more time ...
you will be extreme screwed one more time ...https://www.investopedia.com/terms/c/cvr.asp ...
"These rights are similar to options because they frequently have an expiration date beyond which the shareholders' rights to further benefits will not apply.“
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KEY TAKEAWAYS
- CVRs are provided to shareholders of a company facing significant restructuring.
- CVRs ensure that the shareholders receive additional benefits such as options if a specific event occurs.
- !!!!!!! CVRs carry risks of unpredictable events and not reaching the anticipated price. !!!!
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"So, while they hold an obligation from a company, investors who receive CVRs are more akin to options holders than to, say, bondholders—unlike the latter, they have no guarantee to be paid, and no claim on the company's assets should their payment not materialize."
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"Also like options, all CVRs have an expiration date. Should the required event or events not happen within the specified contingent period, shareholders holding a CVR in an identified stock receive no additional benefits other than those that the stock itself offers."
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Risks of CVRs
At the time of issuance, the real value of a CVR is not discernible. The risk that shareholders face remains unknown because the rights are based entirely on the anticipated price of the stock or some unpredictable event.
"If contingent value rights are part of a merger or an acquisition (M&A), a large part of the risk that would affect the acquirer is effectively transferred to the shareholders of the target company, thus making it easier for the buyer to offer a more attractive price."
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