321Blastoff wrote: Apologies in advance this is a somewhat long but hopefully thought provoking post.
In February of this year (3 months ago) Newstrike completes a bought financing deal with a group of underwriters who purchase @ 73 million units at $1.32 raising somewhere in the area of @ $100 million. Each unit purchased consists of 1 common share and 1 warrant with an exercise price of $1.75 and expiry of Feb 2020.
***NO, THE OFFERED UNITS WERE 60,610,00 @ $1.32 = $80,005,200
*** PLUS OPTION ISSUABLE TO THE UNDERWRITERES = 13,273,590 (OFFERED UNITS)
*** READ THE PROSPECTUS FOR MORE INFO***
I DID. MAYBE YOU SHOULD REVIEW THE NEWS RELEASE BELOW Newstrike Announces Exercise of Over-Allotment Option
Increases gross proceeds of recent bought deal financing to over $92 million
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
TORONTO, Feb. 20, 2018 --Newstrike Resources Ltd. (TSXV:HIP) (“Newstrike
” or the “Company”) is pleased to announce that in connection with its previously announced short form prospectus offering of 60,610,000 units of the Company (“
Units”) at $1.32 per Unit (the “Offering”) which closed on February 16, 2018, the underwriters have determined to fully exercise their over-allotment option to acquire an additional 9,091,500 Units at $1.32 per Unit to raise additional gross proceeds of $12,000,780, for aggregate gross proceeds under the Offering of $92,005,980. Closing of the over-allotment option is expected to occur on February 22, 2018. The Offering is being completed pursuant to an underwriting agreement with a syndicate of underwriters co-led by INFOR Financial Inc. and Cormark Securities Inc. and including Eight Capital and Haywood Securities Inc.
Each Unit is comprised of one common share of the Company (a “Common Share
”) and one common share purchase warrant (a “Warrant”). Each Warrant shall entitle the holder thereof to purchase one additional Common Share at an exercise
price of $1.75, for a period of 24 months following closing. In the event that the volume weighted average trading price of the
Common Shares for ten (10) consecutive trading days exceeds $2.60, the Company shall have the right, subject to the approval of the TSX Venture Exchange (the “
TSXV ”), to accelerate the expiry date of the Warrants upon not less than fifteen
(15) trading days’ notice. The Company has applied to list the Warrants for trading on the TSXV
THIS ADDS UP TO over 69 Million (@73 million) units all of which include 1 common share and 1 warrant. The amount of the entire deal was over 92 Million (@100 Million). I specifically used @ when referring to the actual amounts because I knew I was in the ballpark and didn't think that I had to refer to exact amounts. Pretty much the same thing though isn't it ? Almost imediately after which HIP.WT becomes available at .07 per warrant on the TSXV.
***** YUP
GREAT I GOT THAT ONE CORRECT ************An investment in the securities offered hereunder is speculative and involves a high degree of risk. The risk
factors identified under the heading “Risk Factors” in this short form prospectus should be carefully reviewed and evaluated by prospective purchasers before purchasing the securities being offered hereunder.
The Corporation has received conditional acceptance from the TSXV to list the Unit Shares, the Warrant Shares and the Common Shares underlying the Compensation Warrants (including the Common Shares issuable upon exercise of the Warrants underlying the Compensation Warrants) on the TSXV.
The Corporation has also applied to list the Warrants on the TSXV. Listing will be subject to the Corporation fulfilling all of the listing requirements of the TSXV. There is currently no market through which the Warrants may be sold.
I REALIZE THAT THERE IS RISK IN INVESTING PARTICULARILY IN THIS SECTOR AND I AM COMFORTABLE WITH THAT SO:
The underwriters immediately opt to sell the warrants they received as part of the bought deal ?
Why ? Virtually no time has elapsed and the warrants could prove to be incredibly profitable for them if they just hold them until they are in the money.
******NOPE
IF NOPE THEN WHERE DO THESE WARRANTS COME FROM ? ARE THEY A NEW ISSUE ? IF SO HOW MANY WERE ISSUED ? SEE BELOW ! Or else where do these HIP.WT warrants come from ?
I can only assume that the warrants are the very same from the bought deal and the underwriters have held onto the majority and we are seeing a very small fraction of those warrants being passed around among the public. Who knows, maybe when the price of HIP.WT was @ .23 the underwriters let go of some more warrants and made a few dollars to offset their inital investments. It is all highly speculative and there could many other scenarios I suppose.
******DEAR GOD, PLEASE READ THE PROSPECTUS
So let's agree that the warrants are the same from the bought deal. Why does Newstrike choose to list the warrants in the first place. They will not benefit financially will they ? The warrants have been granted to the underwriters and I assume have become their financial property. So then this listing must be at the request of the underwriters ?
****REALLY? ARE THEY THE SAME WARRANTS....OMG. DID YOU JUST FIGURE THAT OUT.
THEY ARE THE SAME WARRANTS PURCHASED BY THE UNDERWRITERS IN THE BOUGHT DEAL ? NO MORE NO LESS ISSUED CORRECT ? ************AGAIN...................**********An investment in the securities offered hereunder is speculative and involves a high degree of risk. The risk
factors identified under the heading “Risk Factors” in this short form prospectus should be carefully reviewed and evaluated by prospective purchasers before purchasing the securities being offered hereunder.
The Corporation has received conditional acceptance from the TSXV to list the Unit Shares, the Warrant Shares and the Common Shares underlying the Compensation Warrants (including the Common Shares issuable upon exercise of the Warrants underlying the Compensation Warrants) on the TSXV.
The Corporation has also applied to list the Warrants on the TSXV. Listing will be subject to the Corporation fulfilling all of the listing requirements of the TSXV. There is currently no market through which the Warrants may be sold.
As a public shareholder we are suddenly let in on the possibility of an option which was previously only for insiders. The deal seems pretty good too ! The strike price is not scarily far from the share price at the time of issue and there are 2 full years for it to be in the money. So we buy our warrants.
How does our purchase affect the financial bottom line of the company if the warrants are the property of the underwriters ? In fact if the price is to suddenly surge above $3 and remain for over 10 days the company has the option to call an early end to the life of the warrant.
*****$2.60 FOR 10 CONSEC. DAYS DOES NOT END THE LIFE OF THE WARRANT BUT
ALLOWS THE COMPANY TO FORCE EXCERCISE.
IF THE COMPANY FORCE EXERCISES THE WARRANT THE LIFE OF THE WARRANT IS ESSENTIALLY OVER VERY SOON AFTERWARDS NO ? BASED ON A SHARE PRICE THAT HAS BEEN ARTIFICIALLY CREATED. AGAIN....IF YOU READ THE OTHER DOCUMENT ON SEDAR:
REGARDS TO YOUR BOTTOM LINE QUESTION....TO EXERCISE THE WARRANTS YOU MUST SEND:
A CERTIFIED CHEQUE, BANK DRAFT OR MONEY ORDER IN LAWFUL MONEY OF cANADA PAYABLE TO THE ORDER OF THE
CORPORTATION. SEEMS LIKE THE WARRANTS ARE NOT THE PROPERTY OF THE UNDERWRITERS OKAY THEN IF THIS IS THE CASE WHAT DID THE UNDERWRITERS PAY OVER 90 MILLION DOLLARS FOR ? WHO HOLDS THEIR WARRANTS ? “Corporation” means Newstrike Resources Ltd. and includes any Successor Corporation
to or of Newstrike Resources Ltd. which has complied with the provisions of Article 8;
So if the ratio of a consolidation is say 5:1 and the share price reacts accordingly the warrants are in peril of becoming obsolete if the company utilizes their option which in turn forces the hand of the shareholder to exercise the warrant. This infuses the company with more money but most likely only momentarily as people exercise their warrant and then cash out selling the shares they have just received. Remember those who have 100,000 warrants will need access to $175,000 in funds to exercise the warrants. After which they will have made a tidy profit of $3.25 per unit. It seems to me that anyone with any sense will just turn that around and become liquid again.
SORRY THIS MIGHT BE CONFUSING BUT I WASN'T ASSUMING A DIRECT CORRELATION BETWEEN COMMON SHARE AND WARRANT. LET'S ASSUME YOU ARE CORRECT. *****WHAT!!!!????? IT'S A ZERO SUM GAME IF THERE IS A REVERSE SPLIT. IF YOU OWN 100,000 WARRANTS AND IT IS A 5:1 SPLIT. YOU NOW OWN 20,000 WARRANTS. THE STRIKE PRICE IS NOW $1.75 X 5 = $8.75.
WHICH STILL REQUIRES FUNDS TOTALLING $175,000 PERHAPS TOO SOON FOR SOME PEOPLE TO GENERATE SAID FUNDS ? ESPECIALLY IF IT IS A ZERO SUM GAME. *****PLEASE READ THE DOCUMENTS AVAILABLE TO YOU ON SEDAR!!!
I THOUGHT THAT I HAD READ THAT THE STRIKE PRICE REMAINED THE SAME I WILL LOOK FOR THE EXACT DOCUMENT EXPLAINING THIS AND REPOST AS A NEW TOPIC THANKS So my fear is that at best the share price will be falsely increased and for only a very short period after which it drops back to where it was and we hold one fifth of the shares we had before.
***** IT IS A ZERO SUM GAME RIGHT OFF THE HOP. THE SHARE PRICE IS NOT BEING "FALSELY" INCREASED. YES, THERE IS A DANGER THAT THE STOCK PRICE COULD STILL GO DOWN AFTER THE SPLIT. GOOGLE IT, THERE ARE CASES WHERE IT WORKED OUT VERY WELL FOR THE COMPANY.
I HAVE DONE PLENTY OF RESEARCH INTO REVERSE STOCK SPLITS AND THE MAJORITY ARE FAILURES FOR THE COMPANY. I AM SURE THAT THERE MUST BE SOME COMPANIES THAT ARE SUCCESSFUL OR IT WOULDN'T EXIST BUT THE GENERAL FEELING I GET IS THAT THEY ARE EXTREMELY RISKY. REFER TO NEWSTRIKE CIRCULAR TOP OF PAGE 23. YOU EITHER HAVE:
483,389,185 COMMON SHARES TRADING @ $.90 OR IN A 5:1 SPLIT
96,677,837 COMMON SHARES TRADING @ $4.50
483,389,185 X $0.90 = $ 435,050,266.50
96,677,837 X $4.50 = $ 435,050,266.50
SURE THAT MATH IS OF COURSE CORRECT BUT WE WERE SPEAKING OF WARRANTS AND I WOULD LIKE CLARIFICATION DIRECTLY FROM THE COMPANY REGARDING HOW THE WARRANTS WILL BE TREATED. WHILE I APPRECIATE YOUR EXPLANATION I WANT IT FROM THE HORSES MOUTH. I DON"T THINK IT IS TOO MUCH TO ASK REALLY. ANSWER A VOICE MAIL OR AN EMAIL AND BOOM IT'S ALL DONE. OR DOES PM ONLY HAVE TIME TO REPLY TO THE MOST MAJOR OF PLAYERS ? IN WHICH CASE I AM NOT TOO HAPPY AS A SHAREHOLDER So what does consolidation really promise ? Of course I suppose there are other possibilities but this is the one that has me very concerned. It would therefore be prudent in my opinion to wait and see how the share price simply reacts to the financials I had hoped for from the company in the first place.
*****MY DEAR SWEET FRIEND, I HOPE THIS FINDS YOU WELL AND IS HELPFUL FOR YOU. PLEASE DON'T TAKE MY ALL CAPS AS YELLING, JUST TRYING TO SEPERATE MY TEXT FROM YOURS. I HOPE YOU HAVE A WONDERFUL WEEKEND AND I WISH YOU THE BEST OF LUCK.
THANKS FOR TAKING THE TIME TO POST YOUR THOUGHTS, I HOPE THAT YOU ALSO HAVE A WONDERFUL WEEKEND We are in a good place. Why shake things up ?
OR TAKE UNNECESSARY RISKS ?