Very interesting, because to someone who is holding from the IPO, each EFE share has a lot more value than just the current share price.
Assuming the market is efficient (which it is not), and that people are buying EFE with a full understanding of the structure of the issue of options (which I'm not sure that they are), the current price should already be taking into account the dilution that will happen with the issue of the options. Therefore, EFE is effectively already trading ex-option rights.
Given a price of 60c, and an exercise price of 25c for the options, the options should probably trade at around 40c. Given you need 2 shares to get 1 option, the value of the option rights to an original holder is approx 20c share.
So someone selling shares today is giving up the right to 20c, but this value (through the right) is NOT being transferred to the buyer. As more original holders sell less options will be issued and therefore less dilution will occur (actually resulting in slightly higher value to the ordinary holders)... anyway, my 2c worth.
Only really worth selling if you think that EFE becomes hugely overvalued, as for original shareholders, each 1c increase in the share price, is also worth an additional 0.5c for the free options.
Market Cap of EFE is still low when compared to some of the other iron ore hopefuls.
I hold EFE from the float, and don't plan on selling yet.
Cheers Marvin
EFE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
