George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
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Hi extrader
Thanks for the explanation.
So basically it's just a potential transfer of shares between the original owners at an unknown price.
In sy me case, better not to know the garantor, there are few financial institutions around.
What matters is the higher sp the more we and AZ are going to make. The guarantor should have put holders as well and they are present in this bb.
Hi occams/ARahim,
Occams ' consideration ' here is just a fancy way of saying 'payment' in exchange for the 'call option' : £ 1.1 million.
ARahim, the option can be exercised IF the s/p at the time is 0.6945p or more. That number is the 'trigger', not the acquisition price, which is unknown.
Both those bits of info ARE in the RNS, there is nothing in the RNS to tell us what 'consideration' ie payment AZ /Orchestra Group (grantee) has to make to grantor . The RNS doesn't tell us who grantor is, though we can guess it's almost certainly one of the original group of shareholders (a) because it's unlikely anyone outside has that many shares available and (b) because , if the call option is exercised, they'll settle by 'direct transfer' and AZ /Orchestra Group will 'receive ' the shares that way'.
ATB
occams, it is an option to buy at 0.69p. they spent 1.1m on 630m shares, that is 0.175p an option.
Now if the prices gets above 0.69 and bellow 0.86 they can exercise the option and cover some of their costs, if the price is above 0.86p they will make a profit. It will be crazy not to exercise at these prices. if the price is bellow 0.69 they are not going to exercise and loose their bet of 1.1m.
They have actually bought the option as the statement bellow clearly indicates :"acquired ".
"Supply@Me has been notified by shareholder, Orchestra Group, that it has acquired an option giving it the right to receive 630,000,000 ordinary shares of the Company if the share price is at or above 0.6945 pence per share on 31 December 2020. The option cost is £1.1million."
From the RNS, 'With reference to the announcement of 24th September, "Director PDMR / Shareholding", relating to the purchase of a call option for consideration by Orchestra Group'
So he has not actually bought the option , he is just considering it.
AZ will pay 0.86p a share 1.7p the price of option + 0.69p. Hwo knows better AZ or the option dealer? I guess AZ. The option dealer has to offset this risk by put option. It really does not matter a lot for options providers, but it does for AZ and syme.
My bet is with AZ with price minimum of 1.5p. Happy days.
Or AZ hands over 1.1million to unknown. Unknown then buys DW @ .49.DW gets his intial outlay back and the future is well..... to be seen......Just a thought.
Hi Parm,
..'if the share price is say 1.5p on said date what does AZ actually pay? "
It's not clear...and we may never find out. There's no strike 'price' (right to buy at a specific price), only a strike 'trigger' - if it's @ 0.6945 or above on the relevant date 31 Dec.
From the wording of the RNS - 'right to receive', rather than something on the lines of 'right to acquire/buy' - this looks likely to be a reshuffling of holdings amongst the founder, not necessarily core, shareholders, usually worded - if/when it happens - as 'direct transfer to security account'.
The price paid will be whatever the grantor and grantee of the call option have agreed.
ATB
Parm,
If the share price is 1.5p on 31 December 2020, the actual payment of AZ is the execution price that AZ has now agreed with the seller of option plus 1.1 million. The execution price should be lower than 0.6945p
Thanks D,
I assume as well as the 1.1m but still a huge bet that could pay off?
So I can be a little more confident that we should be close to 1p at least by xmas (hopefully well above and sooner ;)
Parm. AZ pays .6945
mick 2,
you are right. I mistakenly regarded £1.1 million as the price at which AZ bought 630 million shares. £1.1 million is the cost of the option.Sorry.
Hi, Just curious, if he share price is say 1.5p on said date what does AZ actually pay?
Just thinking about your original point Mr008. What is to say the party who took the bet doesn't have millions more invested and in fact they would benefit of the share price rises even more than if it doesn't. It seems like a win/win for them then and it therefore wouldn't give them an incentive to drive down the stock price
All due respect, with the newsflow due, I can see SYME blowing the options price out of the water pronto :)
Syme announced the RNS about the CEO AZ purchase of a call option on 24 September .The option cost is £1.1million. AZ will receive 630,000,000 ordinary shares of the Company from the seller of option if the share price is at or above 0.6945 pence per share on 31 December 2020. In other words, AZ will cost £1.1 million (equivalent At a price of 0.174p per share)to get 630 million shares (0.6945p or above per share) . Of course, AZ made a lot of money. This shows that AZ is confident in the future of syme. However, AZ will not only not get 630 million shares, but will also lose £1.1 million (the seller will win £1.1 million) if the share price is below 0.6945 pence per share on 31 December 2020. This is a bet between AZ and the seller of option. AZ will work hard to push the stock price to 0.6945p or above on 31 December 2020. The seller will work hard to suppress the stock price below 0.6945p. For syme investors, this is not a good thing. Because the interests of investors are entangled with this gambling, rather than with the development of syme itself. There is no doubt that the seller of option is confident that the price will be below 0.6945p on 31 December 2020. At that time, unless AZ uses strong funds to pull the stock price to 0.6945p, the seller of option will work hard to suppress the stock price below 0.6945p.
For this bet, investors should pay close attention to the trend of syme stock price and make cautious decisions to buy and sell.