I'm Told NMG Faces A Resulting 29%+ Dilution Going Forward If you want to know why the Nouveau Monde Graphite share price is experiencing a not unreasonably deserved beating lately, you must understand that NMG's largest single shareholder, Pallinghurst, holds a convertible 15 Million Dollar bond and a whole wack of accompanying $0.20 warrants ($2.00 adjusted for share consolidation).
Also understand that "At any time, Pallinghurst will have the right to convert all or a portion of the Bond into such number of common shares of Nouveau Monde equal to the principal amount being converted, divided by the conversion price of C$0.20 per common share. Pallinghurst will also have the right to convert all or a portion of any accrued and unpaid or uncapitalized interest under the Bond into common shares of Nouveau Monde at the market price of the common shares (as defined in the Bond) at the future time of conversion subject to TSXV approval at such time"
"Concurrently with the issuance of the Bond, Nouveau Monde will issue to Pallinghurst common share purchase warrants entitling Pallinghurst to purchase up to 75,000,000 common shares of Nouveau Monde, subject to customary anti-dilution clauses, at a price of C$0.22 per common share for a period of 36 months from the issuance date of the warrants (the "Warrants") . . ."
"Pallinghurst currently owns 52,350,000 common shares of Nouveau Monde representing 19.99% of the issued and outstanding common shares. Assuming the conversion in whole of the Convertible Bond, Pallinghurst would own 127,350,000 common shares of Nouveau Monde representing 37.80% of the issued and outstanding common shares. In addition, assuming the conversion in whole of the Bond and the exercise in full of the Warrants, Nouveau Monde would receive additional proceeds of $16.5 million upon exercise of the Warrants and Pallinghurst would own 202,350,000 common shares of Nouveau Monde representing 49.12% of the issued and outstanding common shares."
Pallinghurst controlling ownership interest has always been the greatest problem here with Nouveau Monde Graphite and now such a problem is once again front and centre for all to take note of.
I could be absolutely wrong here. Never the less, I expect the NOU share price to approach the CAD$3.00 price point during this six month period, i.e. unless we are provided earth shattering good news to save us from experiencing such a clear disaster.