RE:RE:RE:RE:I don't understand the sell off today
Capharnaum wrote:
Basically, they issue debt which carries an interest rate close to the dividend and at some point split into a cheap credit note and a purchasable share at a set price from the issue. Ie: $1B in hybrid debt at 3-4% which in 2025 becomes a credit note at 1% payable in 2030 and is accompanied by a subscription receipt at $32 (in 2025).
Thank you for that explanation, I'm just getting into learning about how to get into private placements & warrants/rights/subscription receipts, so you mention that at the end gets me very interested.
I kind of wonder why companies don't come to thier shareholders with more 'rights offerings', as we should be able to decide if we are willing to support more financial decisions with our own money rather than all these regular back door deals targeting more institutions or major players, and help fund our own success. It would help gauge the current temperature of the shareholders in seeing how many participate with thier shares, how many are so disinterested they sell thier rights or just dont exercise them and finally how many file for over allotment. Yes they would be creating more shares for the company, but the current shareholders get to choose if their ownership % is diluted or not. And if the process doesn't bring in expected funding, they can fall back to the other options like this as a Plan B and with likely a lowered debt amount need. (I have only had one company go through this process and they have done it 3 times since I've been a share holder, twice in the past year and both times they have had over subscriptions of 2.5 times and 1.5 times, and it's been an excellent process it seems for the company and me, the shareholder)