What I mean to say, isn't the max like 427, or something?... So, as long as GNS is at least 25cents when GNS wishes to convert GNSPA... I'll get my full $100? And, as long as GNS is 17.5c I'll get my $74.50 that I paid back...?
Seems pretty low risk to me...
Even if GNS has collapsed to 30c... I'll get $102.50 worth of GNS... and, if I have to sell them for say, 27c straight away... that's still $92.25.
If GNS is 30c, GNSPPA should also be much cheaper... if it's, say, $50... as long as I didn't believe GNS would fall over, I'd be happy to buy more. 5%+BBSW on $50 is a pretty good deal!
But if GNS wants to keep paying me 5%+ BBSW on my $74.50.... I'm pretty happy for them to do that for quite a while :) without conversion (admittedly, I'd prefer conversion ASAP... but).
So, really, the only three risks I can find are: A. GNS dies, and I might not get my debt back (unlikely... and, not necessarily a given -< I mean, they have net equity of about $1.3Bn IIRC.... even if 90% of that was wiped in a fire-sale... I could still get my full debt back at $100)....
B. GNS falls below 25cents or so. Unlikely, would mean a fall of around 85% from current price... possible, but, as long as the economy doesn't completely keel over, it should be okay. As far as I can tell, it's very unlikely that, even with bad news, GNS would fall to 25cents unless they were pretty damn close to administration.... and, I think that is VERY unlikely, especially looking at the balance sheet.
C. GNS redeems my GNSPA, then, at the same time, places GNS in a trading halt and issues a heavily discounted SPP or bad news that will drag down the SP. Surely GNS won't treat debt holders like that!? They could never issue market debt again!? Also, even if I took 20% discount on conversion price, ($102.50 - 20% = $82ish)... I only paid $74.50 and I'm getting good interest!?
So, as far as I think I understand the risks.. I'm pretty happy. Have I understated any?
GNS Price at posting:
$1.17 Sentiment: Buy Disclosure: Held
