GREY:BXEFF - Post by User
Comment by
C32BTTon May 06, 2018 3:45pm
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Post# 27989059
RE:Good Signal
RE:Good SignalCompromise wrote: It would appear that this conversion of debt to common stock is a good sign for other shareholders. It tells me that someone is willing to give up an annual return of 8.5% for the uncertainty of common stock fluctuations. They must believe that there is a strong probability of common share aporeciation of much greater than 8.5%/a. If not, why take on the risk. I think I will buy some more shares and forget about them for a little while.
The debt holders are getting common shares for 5% discount to the volume weighted average price on the Toronto Stock Exchange for a 20 trading day period preceding April 30, 2018, which works out to approximately $1.60. The only reason they exchanged it was because of the massive discount to market price otherwise they wouldn't have. Assuming the company issued new shares at market price the debt holders could've bought the new commons at full market price (If they believe in the company) and the company couldve taken the funds to relinquish the debt in the same manner, but those two scenarios are completely different. The discount is the major reason.