More Calculation Proofs
At an average share price of
.06 the market values the company at (
.06 share price) * (114,581,449 shares) = ($6,874,886.94 current market valuation) . All things being equal the new share price will equilibrate to ($6,874,886.94 current market valuation) / (25,462,544 total new shares) = (
.27 share price post issue of new shares). Do not get excited, remember to factor in the 150:1 consolidation into your equity stake. So how does this affect you? Consider the following example: Suppose you own 1,000,000 pre-consolidation shares. The value of your equity stake is currently (
.06 share price) * (1,000,000 pre-consolidation shares) = ($60,000.00 current market valuation). Post issuance of new shares you hold (1,000,000 pre-consolidation shares) / (150 consolidation factor) = (6,666.7 post new issue shares). Your equity stake is worth (
.27 share price post issue of new shares) * (6,666.7 post new issue shares) = ($1,800 post new share issue valuation). This is 3% of your original equity stake; 97% of your original equity stake was redistributed to the creditors. Note how this correlates exactly with the "retention by existing shareholders of 3% of Adanac’s Outstanding Common Shares". Having worked through the calculation proof long form it is clear that much easier calculations exists: (equity stake post new share valuation) = (equity stake pre consolidation evaluation) * (0.03), also (number of shares you hold post new issue shares) = (number of shares you hold pre-consolidation) / (150 consolidation factor) . Work through the calculations to convince yourself of the numbers. Then, rather than using 1,000,000 shares, plug the number of shares you own into the equations and compare the results to those in your trading account at the close of trading March 3, 2011.