I think its a win for you cdchi1, and if i was you, i would hope the deal goes through. Because of the extra leverage, you get extra risk with the Ca's, just the same as the options. If the share price goes under the option price, you are totally out of pocket. Thats happened to me before, where i have lost the lot, and other times i have made a killing. Unfortunately thats the risk in this type of security. For normal holders its a lose / lose situation. By having the Ca, you limit growth on the ordinary shares, and you create a more complex structure (lose), if you excerise the Ca's at the proposed 3.25, you are ineffect giving out free shares to people, who would otherwise be entitled to nothing. The compensation is too high for my liking. Better off to just leave the Ca's there. Hasn't stopped share spikes or capital raising in the past. Why do it now. Interesting to note looks like the directors have given up some performance shares as well. Am i right in noticing this.
The company can call on the remaining 35 cents on the Ca's if it wont's too any time. No one will pay the remaining, and the Ca's are gone from the registry. Why not just do that, because the company protecting half of the board. If this isn't a conflict of interest and fraud on minority shareholders, as described in the corporations act, I'll go heave.
ERH Price at posting:
11.5¢ Sentiment: None Disclosure: Held
