Benjamin Grahan wrote about warrants many years ago when they were first introduced as a financial instrument. He was far from flattering about them, in fact he said they should be banned. As far as the private investor is concerned, take heed and stay away from any company issuing warrants. Take a look at the companies that issue them and the ones that have never issued them and would never issue them. The latter value their shareholders, because they are paid up shareholders of the company themselves and would never dream of diluting themselves and others to oblivion.
To simplify it, it's effectively buying the stock at 31.5p regardless of market price. The proceeds of the executed warrants at 31.5 go to the companies balance. The rest is a profit for the person executing as normal I.e if they had bought the stock at that level when it was there.
The warrants have no value till executed and that value to the companies coffers is the price it is set at. I.e 31.5p for each one at that time regardless of the share price (which will obviously need to be higher than the set price to buy)
Some further thoughts on this. Let's say share price rises to 37p. The warrant will have a value of 5.5p + time value. For argurments same let's say another 4p for the time value. The warrant will be worth 9.5p. Not just the 5.5p
Hi all, I am an occasional poster here and have been reading the offer document and all the helpful tips here. With respect to the warrants these will be tradable if I understand correctly. If warrants act like options they will have a value even if the current share price is below 31.5p. Do all the calculations so far on this chat assume a nil value on the warrant until it passes 31.5p? Again if priced like an option, a warrant on a stock this small (with such large potential, I appreciate we have a long way to go still) that goes out 5 years I believe will have value. What that value is I have not got to yet. Just wondered on posters thoughts??
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