Perhaps the market already priced this into the current SP?. Its not like its a new injection of cash - its just shuffling the numbers around.
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Yeah hard to say if its priced in or not, I suppose getting rid of $13M of debt that you are paying 9.75% interest on would be good for anyone in these times.
How are we looking now Enumerate. Todays trades having a bit of an impact.
If we take your $12m converting to shares I'm now getting noteholders with 154m shares against current shares of 76.6m. This suggests existing shareholders loose control of their company.
Taking the new VWAP into account I get a new SP of $0.027.
Alternatively if I add the $12m back in the SP lifts to $0.08.
If we take NZF's announced 29.8% note renewal rate I get;
- a new SP of $0.024
- or with the $14m added back in $0.08.
I'm not sure the Directors were expecting a dropping SP / VWAP over the 28 day period. So hows your Death Spiral looking?
Quote:
So, this is the mechanism for busting the "death spiral" - after the election date but before 10 days before maturity - if you have elected to convert to shares, they can redeem your holding in cash.
So, the proper "death spiral" predator will:
1) Elect to convert to shares
2) Wait until 10 days before maturity (hoping for light volume on the VWAP)
3) Within the 10 day window to maturity (also within the 20 day VWAP calculation interval) and then dump high volumes of shares on market to drive down VWAP.
Bottom line: if you want cash - convert to shares and be prepared to play hardball in the establishment of the conversion VWAP.
Looks very much like we are on the path to the "Death Spiral".
If you were an existing holder of shares - you would have to give very serious consideration to dumping, at current prices, in the knowledge that you could pick up many more in the near future. This behaviour would give you a partial hedge against the impending dilution. However, we are seeing very minimal trades, at the moment.
I think in a few months time the share price will be mimicking the ALF price. At 0.08 the market cap is around 6.0M which I think is roughly half of what the equity was at 30/09/2010 so I think Mini is right that this is factored into the SP. So if we assume that the extra 13.0M of equity is only valued at 50% by the market and conversion takes place at 0.08 then I guess the SP will be some where south of 0.04 when the dust settles. From there I think it can only go one way down to the penny dreadful status....
If I was the seller looking for 0.09 at the moment , I would think seriously about taking the 0.06 on offer.
And someone did!!
WOW someone listened to me :) Now if only I could get the wife to do the same thing............
Has anyone thought that the possible "financial partner" who is doing due dilgence may be a future buyer for all the shares?
Alan you will have to be careful reading this thread, laughing out loud then nearly falling off your chair. You don't want to end up on the floor which appears to be where the NZF share price is heading.....
At 0.06 this will be a disaster for the company and the major shareholders, I wonder if they will find the cash to buy the notes? I know we all suspect they don'y have the cash but Mr Huljich surely does and the only question is does he want more exposure to this company in this market. I would think not, I think he got his shares at around 0.53 so although he could average down I don't think there is enough appeal to do so.
Bruises are healing :-)
Not sure how it is bad for the company? The company itself would, I guess, prefer that all the debt was converted to equity, but apart from that, I don't see how 'it' would care about its own share price?
The existing (and prospective) shareholders on the other hand - they will care a lot!
Alan.
Well I did say "Company and the major shareholders" and in reality who is "The Company" it is the shareholders. All current shareholders will have lost money at an SP of 0.06 as this is an all time low. If the major shareholder had of sold out at $1.50 he waould have got $26.8M and some change, if he sold out now he would just have the change!!
That is why some independence is needed on the board, the board currently (according to companies office) consists of the major shareholders who as human nature dictates would obvuiously make the best decisions for themselves ahead of the company and other minorities. At this price it will be disastrous for them.