Verde $1 Warrant holders - time to act!Hello Fellow Verde Warrant holders,
The holders of the March 2021 $1 Verde warrants will need to make a decision in the next couple of weeks as to whether to exercise any warrants they still hold, or let them expire worthless once the expiry date passes in early March 2021.
Just over 1.4 million full warrants were issued as part of an earlier fund raising and with the price of the common shares trading well under the $1 strike price there had been no warrants excercised to the last report at September 30, 2020.
With the January run up in the NPK share price, the warrants are now "in the money" enabling warrant holders to lock in a gain between the cuyrrent share price and their $1 fixed cost. One option is to sell existing NPK shares the warrant holder owns at a price above $1, then replace these shares with new treasury shares bought before the warrants expire. If the warrant holder has no NPK shares, you can still transact a short sale in your account, and then cover the short position by exercising your warrants at $1.
A caution on the short sale option. Brokers are currently requiring (Questrade example as of today Feb 8 2021) 250% margin on the short position, and are charging 11.3% interest on the value of the short sale, calculated daily. I have not yet been able to determine the processing time from the date you exercise the warrant until you have the actual shares in your account. Any undue delay is going to cost you a bundle in carrying costs, and tie up your cash in teh margin cover.
In any event, as a Verde Shareholder I hope all warrant holders decide to exercise their option to buy additional treasury shares at $1, giving the Company a very welcome $1.4 million in additional working capital (and without additional brokerage or marketing fees).
Cheers,
S.