I have to agree with you, the sp will increase in the next 3-6 months but by how much, for how long, and from what level.
If the potential dilution of the register was not an issue, then why would the Company go to such measures to avoid it?
As I’ve been arguing for over a week now, the Bs are vulnerable because the current funding strategy is rightly dilution-averse. This implies an imminent cap on the share price, imo. And my theory on the Bs is so far proven to be right.
Also, it seems to me that the comments by the Company on bringing down its WACC level, in particular, suggests that both the retail As and Bs may now be in trouble. From my last look, there is approximately 850 million As and Bs, but mostly Bs, held by retailers. There will also be a similar amount held by the top 20 after the 225m allocation and excluding the managements and directors 75m. Whatever the exact numbers, that's a lot of outstanding options that under the wrong conditions could cause a share price meltdown, imo. Also, it seems there may be many EFH non-qualifiers in the top 20 holding significant amounts of As and Bs who, naturally, will be gunning for an increase in the share price before they expire. Bummer!
Now, the Company seems to be saying that EFH will not trade the shares in ways detrimental to the share price - it's 'expected' and 'likely' to not happem. That is to imply, is it not, that they won't create large swings up or down; but imo, definitely not up as that would certainly trigger the retailers and others to convert thus adding hundreds of millions of shares to the register. How can it possibly be in EFH's interest (or ECT's and its major shareholders) to dilute the register, especially when EFH are free to trade the collateral with a view to hedging and a view to increasing the value of the stock? Colloquially, wouldn't pumping the share price and thereby diluting the register be $hi!!ing in your own nest?
The proposition of an off market transfer also wouldn't make sense under these conditions. Putting aside the obvious other risks involved, why would NLC and NMDC pay a premium for a stock that, on the news of its purchase, would cause the share price to increase to levels that would trigger massive dilution? To increase the value of the stock, they (EHF) will, imo, first need to get those retail options out of the way (definitely Bs and now likely As) and then there will have to be some catalyst to create, justify, and maintain a $100m plus MC. But with the techs still at demo and pilot stages, from the market's pov, I just can't see how that could happen in the short to medium term. Having said that, the deal(s) is so complex and opaque to the average punter that with no other resources at their disposal or superhuman research skills (curiously only for one stock), I guess anything could happen. But I'm fairly confident we're in for long six months.
I have to commend the Company on sticking by its original pronouncements that it will endeavour to maintain an orderly register, minimise dilution, and look after its long-term shareholders.
ALL IN MY OPINION.
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