FormerXBC Inc XEBEQ

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[ZouZS3]

About the increase of credit facility with FTQ.
 

On November 9, 2021, Xebec and FTQ entered into an amended and restated

Loan Agreement, increasing the credit facility provided by FTQ by $15.0 million and providing for the issuance of 4,500,000 warrants to FTQ at an exercise price of $4.44 per warrant for a 3-year term. This transaction provides access to additional liquidity to strengthen the Company’s strategic initiatives.

Initially,  entered into a loan agreement (the “Agreement”) with the Fonds de solidarit FTQ (the “Fonds”), for an unsecured loan facility of $10 million. The loan facility has a term of 5 years. As part of the Agreement, the Fonds has been granted 3,000,000 warrants exercisable for a period of 2 years from the date of closing. Each warrant will allow the Fonds to purchase one common share of Xebec at an exercise price of $4.58, representing a 40% premium to the 20-day volume weighted average price (“VWAP”) as at closing of markets on May 4, 2020.

 

[Ciao]

Brilliant, great point. Perhaps the short wanted to keep the share price away from the $4 range.  Once near $4 FTQ would no doubt exercise their warrants. They are long term shareholders. What if FTQ excercises them early and or well below $4? Were the shorts hoping to cover their short position with a equity financing as they realize XBC's appetite to raise cash for growth? This $20M

[AlwaysLong683]

Huh....? Why would FTQ want to exercise warrants with a strike price of 4.44 when they can buy shares on the open market at prices below 4.44 per share....? Holders of warrants do let them expire worthless if the share price does not exceed the exercise price of the warrant over the term of the warrant, so XBC first needs to hit a share price that exceeds the 4.44 strike price within the next

[tamaracktop]

That's exactly right. It's also not necessarily a good thing for shareholders when warrants are excercised. There's another major difference between warrants and call options, other than warrants usually having a much longer duration than calls. Call options are a contract between two parties. Warrants are issued directly by the issuer. Warrants are dilutive. Calls aren't.

[ZouZS3]

Actually based on the last financials. Even though they were exercised they were not dillutive.

[ZouZS3]

There is still 3 million shares that are not exercised. Probably the ones issued to FTQ. The 4.5 million newly issued warrants dont appear on the statements since it was issued in Q4

[tamaracktop]

No. Based on the current stock price they wouldn't be dilutive.

[ZouZS3]

ohh I see

[Ciao]

Call options do not put funds into the companies treasury. Specific in XBCs case, although dilutive, these FTQ warrants represent only 3% dilution now and funds would help with capital needed for the growth of the company, esp. Service center acqusition. It's common for small caps to raise funds using warrants although it's more common as a sweetener in a common share offering. h

[tamaracktop]

Yes. I know call options don't put funds to the company. That was exactly my point. Believe me. I know the difference.

[Ciao]

the reply was for the general audience 

[tamaracktop]

All's good. Now, if only the stock would be good.

[Ciao]

likewise, did you really think I had doubts that XBC was an ongoing concern :-) 

[tamaracktop]

That's the only time they're used. That's why you'll never see a Xebec warrant again.

[AlwaysLong683]

Though both standard options and warrants typically offer the holder to purchase one common share at a given exercise price, there are differences: Warrants are usually issued to external investors participating in an private placement / equity raise as a sweetener to pursuade them to buy the large quantity of (new) shares being offered in the equity raise. The strike price of the warrant is

[ZouZS3]

Exactly! So the 3 million warrants expiring in May 2022 are out of the money. Doesnt look like FTQ exercised them. If you look at the financial statements there is still exactly 3 million warrants outstanding. Basically a loss for FTQ. But what is promissing is they issued another 4.5 million warrant expiring 3 years from now at a strike of 4.44.

[Ciao]

Perhaps this is far fetched but FTQ is a long term friendly investor to XBC and their mentality is different from retail, broker dealers and fund managers. Let's see what justification the short has for keeping their position open as q4 will be out in a few days. If their game is a long one it makes sense for them to keep the share price away from the exercise price as long as they can. If q4

[tamaracktop]

Cioa. While I read all your posts and respect your opinions, I really do wonder how anyone here could even raise the question " if Xebec is an ongoing concern". A few people have, and I suggest their reasoning is nothing more than the stock's behavior. This has me flummoxed, although I can easily come up with a half-dozen companies where this concern would be a legitimate one. The

[Ciao]

I'm not raising the concern. If it's a valuation short then the only reason that the shorts would continue to hold their position to below liquidation value is that thought. Just making the point that It's a short that has been stretched beyond reason on a valuation basis. Now I'm thinking they are hoping for a financing to cover their short position and keeping the share price

[filoux004]

Just like Bombardier that's been reduced to selling private jets to Russian Oligarchs ..oops that market has dried up. Long XBC but with the footnote that I've repeated several times is that the sell and adoption cycle of RNG technology will be a long one especially in NA where the chants of Drill Baby Drill is back at the top of the Charts. Xebec future looks much brighter in Europe with