Interesting that the agreement between GEM and CIPI was called a binding Term Sheet - yet when CIPI decide not to take up the full 2nd tranche there seem to be limited consequences (for CIPI), apart from the selling down of Tranche 1 if they default on the amended subscription total.
According to the "binding" agreement CIPI was to subscribe for an additional 38M shares @ $3.88. After some negotiations they agree that CIPI only need to subscribe for 8.2M shares @ $3.88. CIPI have through this action avoided an immediate capital loss of around $12.9M or so - based on the share price prior to the suspension ($3.88 minus $3.45 times the ~30M shares they will now not take up). Wonder if CIPI will be able to buy shares on the open market (at lower prices) with the $117M which they will now not need to hand over to GEM (@$3.88)?
Existing shareholders will now wear the impact of the replacement-placement which will be carried out at $3.10 to $3.20.
Have I misunderstood the term "binding"? I would love to do business with companies like GEM where you can simply walk away from your commitments (with minimal consequences) when things do not play out in your favour.
GEM Price at posting:
$3.45 Sentiment: None Disclosure: Not Held
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