It seems logical that if they hit good flow rates and open up to production FAST to get income rolling in then the SP will increase.
That's a bit like selling a rental property that you bought for $500k and sell for $1mil, you don't get $500k profit.
On any good news that should increase the SP substantially there are these noteholders who wouldn't want to sit with piles of notes if the SP is going to double or treble, regardless of their interest component.
So what would you do? You have to ask this question.
If you saw the SP increasing and also believed it was going to stay up at a higher price than currently, you would convert your notes while the 5 day or 10 day vwap at the lower SP was kind to your conversion , and plus that bit lower also.. the discount. The small amount of interest given up if you hung onto the notes would be made up many times over by converting to shares at a discount to the past lower SP and selling into the new higher SP. Also, being competitive you may want to beat the other noteholders while a higher buy price is lined up by dropping your newly acquired shares into an appreciating buy line which then has the effect of negating the rise.
As we haven't seen many notes converting as yet those noteholders would have to be believing the SP may yet be going lower still , if so it's simple math because they convert them to more shares.
Everyone might argue that they would want to make money but they do because with a conversion at a discount they have already made their profit because of the discount as long as their timing is right.
But here's the trick, if they want to convert at the lowest price , which is 0.001 they still get a 10% and 15% discount depending on the series note, and by that time there are just miles too many shares , cannot possibly raise any sort of $'s at that SP to sink new wells, so there is a consolidation.
Much like VIL as those in the know have bought shares at a discount (0.0007) to the current lowest price of 0.001 which the average Joe cannot do. They then advised consolidation is taking place at 50:1.
So you see the noteholders can get the bulk of the shares at a discount in a company especially if SP is down to the lowest level as with GGE and VIL.
The inner workings and beneficiaries of fund raising.
GGP Price at posting:
7.5¢ Sentiment: None Disclosure: Held
