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Thanks Vas but clearly a very subjective set of terms that can be interpreted in various ways.
It states the exercise price is 1p which I take this to mean that to get the shares Viridian would have to pay only 1p per share.
In terms of when they become exercisable, it does state 'or'
"which are exercisable on the Company's Ordinary Share price appreciating to 60 pence, OR otherwise, exercisable at 25% per quarter following the 12 month anniversary of the grant date."
So either once they get to 60p or in tranches of 25% per quarter after 12 months.
Anyone else have a view on this?
So Viridian have taken the warrants as salary and will not get paid unless the SP rises over 60p, over next 5 years. Therefore, if the SP only trebled in the year ahead to 59p then it would not be worth taking their warrants.
The following year they can take 25% of warrants every quarter if over 60p if they wish.
It seems that for every 10p over the warrant price ( 60p) that Viridian sell at will equate to approx. £1.1 m pound !
If CHILL hit the £1 again Viridian could sell All their warrants and make £44 m, or 25% and make £10m and kep the rest for the future.
DrB83. Thanks. I think your interpretation is better than mine.
I think the problem your having at the end of your post is that if they sell anytime for 60p, they will not make money . They have warrants which allow them to buy at 60p anytime in five years ( the shares will not be added to the total number of shares in company until they are sold) . If they sold at 65p. then they would make a 5p profit on each warrant - so if they exercised the warrant, they would buy / get each share for 60p from CHILL and sell it on market for 65p - so they can only ever make a profit on anything above 60p a share.
so yes theoretically, if the sp went to 65p next week they would be free to sell for the 5p profit, or hang on in hope of better returns later. BUT, after the one year holding measure they can sell in 25% amounts, if over 60p ..thereby taking some profit and keeping some warrants in for the bigger share price increases.
Hope this makes sense.
Thanks Vas,
I have reread again and this is my take:
We have given Viridian some 11m warrants to buy 11m shares at some point in the future. They will buy them for 1p each so £110k.
They can't buy these shares yet but have 5 years to make the purchase.
The shares become available for purchase either
A) as soon as the SP hits 60p or,
B) 25% become available from 1st Oct 2022
25% from 1st Jan 2023
25% from 1st Apr 2023
25% from 1st Jul 2023
Viridian can sell whenever they want. I don't see any terms around when they can or can't sell.
At today's rate we have given him 11m shares which is approx £2.2m of the business. If he can help us maximise our potential then £2.2m would be more than worth it.
The term of the contract with Viridian has not been disclosed directly but based on my theory, the term of the contract could expire once he has his shares so worse case 2 years. My theory does however mean that if we hit 60p in 2 months time then he can cash in his warrants and be on his way. That bit doesn't sound right as I'm pretty sure we could get back to 60p without him. Bit of a grey area for me there.
DrB83.
This is just my interpretation from what was given in the RNS.
RNS
"As part of the agreement, Viridian has today been issued warrants exercisable into 4.9% of the Company's fully diluted ordinary share capital (representing approximately 11,290,826 ordinary shares), with an exercise period of five years and an exercise price of 1 pence per ordinary share of 1 pence each ("Ordinary Shares"), which are exercisable on the Company's Ordinary Share price appreciating to 60 pence, or otherwise, exercisable at 25% per quarter following the 12 month anniversary of the grant date."
Viridian have been allocated warrants for 4.9% of the company's share capital which is 11 1/4 million shares. The shares are today (20p) so deal is worth approx. £ 2, 250, 000 TODAY.
They have been given two options on how they take their warrants.
Option 1. Hold the warrants / shares for a maximum of 5 years and they would be able to sell if SP is at, or over 60p at this time. Would be worth minimum in five years of £6, 750,000 if at 60p a share.
option 2. Viridian are locked in and unable to sell for one year until anniversary of the grant date (which would be 30th September 22) and can then opt to sell / exercise a maximum of 25% on any quarter!! Now, I do not know if this means they can sell 25% at any quarter over the next one year, or over the next five years.
So, if the CHILL SP doubled each year for the next 5 years and they chose option 1 the share price would be at £3.20 in 5 years’ time x 11.25 m shares = £36 million profit for five years consultancy.
If they preferred to take option 2 then in a years’ time once the grant date had expired the SP would have doubled to 40p (and as they can sell through this further year the share price will double again to 80p) – so they can sell throughout this year at an average share price of 60p.
This would give VIRIDIAN 11.25 m shares x 60p = £6,750,000 after two years consultancy – if they sold 100% .
If it was me then I would think I had a good deal here with option 2 because depending on my performance and the company’s performance year on year ( which , lets be honest is an unknown), I would always have an option to sell up if things looked bleak, yet also have the option to hold on longer for up to five years, if the company took off.
Can someone explain the financials relating to the agreement with Viridian please?