Post by
mrmoribund on May 12, 2021 12:32pm
Arbitrage opportunity?
Right now BYL is $1.12 bid and BYL.DB is $93.50 on the ask.
Logically, given that the Debenture Resolution passed, common shareholders should sell their common shares at $1.12 and use the proceeds to buy the BYL.DB at $93.50. Indeed, I would have expected that BYL.DB would now be trading very close to $100, maybe even a bit higher, because that would be roughly equivalent to buying the common at $1.12, which is today going on actively.
Owning the DB at $100 arguably, at this moment, makes more sense than owning the common at the current price. You would get 30 days (following May 19) in which you could convert at the new conversion price (likely around $1.12).
Owning the DB would give you 30 days of protection in both directions. So if, say, at the end of May the company reports great news and the stock goes to $2 then you convert and you're no worse off than if you'd held the common. But if, say, bad news comes out and the stock drops to 70 cents then you don't convert. (If you then want back into the common story you sell the DB and just buy BYL on the open market.)
Anyways, current pricing on BYL vs. BYL.DB looks like a market inefficiency.
Comment by
oceaneleven on May 12, 2021 3:42pm
The New Conversion Price will be determined based on the volume-weighted average trading price of the common shares of the Company on the TSX for the five consecutive trading days ending on May 19, 2021.
Comment by
Sikong on May 12, 2021 4:40pm
@Ocean11, thanks for the reply. That's my point. When the conversion price is unknown, it cannot be used to determine the intrinsic value of the debenture. What I can see here is , only the expectation of trend of the share price can be used to consider what a reasonable price of the debenture "should" be. Just my 2 cents.
Comment by
Rockafellow on May 14, 2021 10:42am
I wonder if Mingzhu lost money selling out... . .. U still can sell out too Ocean & still make a 12 cent profit to buy more ORL which has soften a bit. .... ... ORL is sitting on $250 mil US & is in too shape for expansion program ... .... .. I would b a buyer if I had more cash on hand but holding on others right now . .