So the CN holder needs to sell at approximately 72% of the conversion price (ie. a 28% buffer below the conversion price). 72% is break even, above that is "profit", below that and they are losing money on lending. This is true no matter what the conversion price is.
Keep in mind -- this "profit" that everyone is all up in arms about - is essentially interest on loaned funds plus the 10% discount on the note.
So for example, they converted at 1.9c in the last batch. That means they need to sell at above 72% of 1.9 to walk away with more money than they loaned- or they need to sell at 1.4c or above.
Also keep in mind - the conversion price is set at 20% above the average 2 day vwap in the preceding 5 days. So theoretically, in a flat market, - they have already started eating into this 28% buffer thanks to the conversion premium.
I'm not sure if the $350k cap has hurt us more - they are still always confined to the 72% of conversion price floor. So perhaps if there is enough demand above the 72% floor - they could have unloaded more in bigger batches. This would have accelerated the pay down process rather than the wound followed by a slow retail bleed. But if the demand isn't as plentiful - they'd likely stage it out in chunks in order to let the demand refill like they're doing anyways.
I'm inclined to agree with you though - I think it probalby has hurt us more in the end. In times of high demand - they could have just gotten this over and done with. Instead we have a big CN selldown usually creating 5-15% hit to the SP, then trailing retail sales over the following weeks, coupled with reluctance for new investors to enter with CN hanging to slowly bleed us to death.
XPE Price at posting:
1.5¢ Sentiment: Buy Disclosure: Held
