Another question..??? - Another question involving this quote below...
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- Subsequent to the quarter, on October 29, 2020 , the Company issued 17,692,307 units at a price of $0.65 per unit for gross proceeds of $11.5 million . Each unit consists of one common share of Willow (" Common Shares ") and one half of one Common Share purchase warrant of Willow (each whole warrant, a " Warrant "). The Warrants have a strike price of $0.85 per Common Share, a 24-month term and a forced accelerator clause that allows the Company to force exercise of the Warrants if Willow trades at a 20-day VWAP of $1.20 or greater.
How is it ever possible for the share price to go above say 1.30 as long as the warrants are 40 cents? For If I have 10000 ( ten thousand shares), I can sell them at 1.30 and make 13000 dollars. Then, I only need 4000 dollars of this money to buy 10000 shares at 40 cents. And I can keep the 9000 dollars in the bank in case I need to pay the exercise price. But the exercise price will only be 8500. So I am left with 500 dollars for every 10000 shares AND, I still have my 10000 shares of Willow. Seriously, I am predicting that the share price will not go above 1.30 as long as the warrants are being sold at 40 cents. For everyone can simply sell their shares at 1.30 and buy warrants at 40 cents and bank some money, and put the bulk of it away in case we are forced to exercise. And it could be almost 2 1/2 months before we are forced to convert. First it would be only after 20 consecutive days of Volume weighted average price above 1.20. And if this happens, then sometime within 10 business days, the company will give us notice that this condition is met. And we then have 30 days from this notice to exercise our warrant rights. So basically almost 2 1/2 months could go by from the 1st of the 20 consecutive days before we are required to do anything. So everyone who has shares, consider selling your shares and buying the same number of warrants, and banking the rest of the money in case a forced conversion takes place. Seriously,,,,with the ask price of the shares at 1.28....and the ask price of the warrants at 40 cents.....your in the money. You can't lose.