"I was given 2670 free options to be exercised at $1.25 until April 2011. Please tell me - am I right to think that the only way to exercise the options will be only if the sp will be above $1.25?"
Hi onyx. I would start saving up your funds to be able to pay for those 2,670 Options @NZ$1.25.
Okay now you have till May 2011 before those options "expire" When 2011 comes around you will be taking quite an interest in the share price of the main PRC shares. You will be hoping that the sp for the main shares is going to be going up and above NZ$1.25 before the final date for conversion of your Options into new PRC shares.
Ideally you would hope that the main shares are about NZ$1.30 at least by about the end of April 2011 and look to be heading higher. Then it is a simple decision. You would pay your money (@ NZ$1.25)and get your Options converted in to shares. And you have made a little gain on them. Anything above NZ$1.30 and you are definitely winning by converting your Options at NZ$1.25.
IF HOWEVER........ (and I doubt this very much) for some reason the PRC main share price was languishing down below NZ$1.25 then you would be reluctant to convert the Options.
It would all depend on how much below that trigger level of NZ$1.25 the main shares were. If they were at NZ$1.20 or less then you probably would not bother because you might be able to buy the ordinary main share on market for less than it is going to cost you to pay up the NZ$1.25 per option for converting your options.
Of course you are not required to take up any of the options. You can let them lapse. They cease to exist after the expiry date.
Or you can take up some of them if you think it suits you. E.G. you might decide to convert 1,500 of your 2,670 if the price was right.
Now that is probably more than enough information for you to absorb at this stage if you are new to Rights.
Check back if there is anything you do not understand or if I have confused you about anything there.
PRC Price at posting:
81.4¢ Sentiment: Hold Disclosure: Held
