I,ve had a quick flick through the posts responding to the options underwriting and it appears some researched facts (and informed opinions) might be useful.
1. The underwriting company obviously has not signed up to waste around $2million by simply hoping that it might be profitable to exercise these options (at 4 cents) - they no doubt feel informed and are confident of a significantly stronger share price in the very short term. Like us all, they would be looking to turn a substantial profit!
2. Interested CFR holders should check the history of other companys they know who have had options exercised - you will find that no matter how good the share price looks there will always be a percentage of holders who do not exercise (they may have moved, passed away, have not been able to raise the funds, not understood how options 'work' (very common apparently) or simply not bothered with or read their mail) The job of the $2million is simply to tidy up these 'loose ends' and therefore 'top up' the funds collected to the expected $7million+
3. We are expecting a significant announcement by CFR (re:CPH figures and projections) in the week of 15th-19th December - having a substantial positive impact on the share price + also possible exciting news on the lead up to this date. If something went wrong and this did not occur the company would at least start the new year with a min. $2million - a very unlikely senerio in our opinion ! - but not a bad worst case.
4. As previously posted the 5% underwriting fee will not cost the company a set $100K - it will only be 5% of the total value of options that they manage to pick up - this might only be around $500K worth i.e. a $25K fee. If they don't get any - there will be no fee.
Looking forward (along with many others) to an exciting December for CFR
VB
CFR Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
