RE:Weak Management Quality of the assets....
quote=NWOntario]
Are we now hoping that the management is covered by the rise in WTI and WCS?
ON THE OTHER HAND for us CNBC viewers
If the stock doesn’t move up from .94 Cdn the warrants are worthless and won’t be exercised which means their financing costs have actually decreased from 9.875 to 9.75, so about 12 basis points. The fact that the lenders tied their kickers or sweeteners to increase in stock price shows they have some confidence in the company, often times lenders get kickers that are “free” equity in that they are just given equity as part of the deal, in this case they don’t get the equity for free but just get to purchase it at a fixed price, so the only way they have any value is if the stock price increases above .94, which is the current price essentially. Sometimes the kicker is also tied to a value that is below current market value, which is also “free value” but since they are issued at current market value there is nothing free
But if the stock doesn’t move up from .94 Cdn the warrants are worthless and won’t be exercised which means their financing costs have actually decreased from 9.875 to 9.75, so about 12 basis points. The fact that the lenders tied their kickers or sweeteners to increase in stock price shows they have some confidence in the company, often times lenders get kickers that are “free” equity in that they are just given equity as part of the deal, in this case they don’t get the equity for free but just get to purchase it at a fixed price, so the only way they have any value is if the stock price increases above .94, which is the current price essentially. Sometimes the kicker is also tied to a value that is below current market value, which is also “free value” but since they are issued at current market value there is nothing free
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