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No much to explain. If you are holding CBs and you short, you are essentially saying “lock in the share price now and cover the short when CBs are Converter.
Your advantages:
- you lock in the share price now
- you still get the coupon on the bond
Disadvantage:
- you miss out on future share price increases
- you pay some financing fee
Anyhow, eventually, they get converted and the short position will be closed, so this is ok...
Some sort of arbitrage play petra with the CB's, or surely the rise from 10p would have been too punishing. Must confess I'm not 100% on top of it so if someone else wants to explain exactly how it works then do step in.
It has been said that Polygon's short is an hedge running alongside some convertible bonds, so if true they are not as worrying as pure shorts. Eventually they will become a massive plus when they need to buy back to clear the short position. I may be talking a load of nonsense so don't take this as fact.
Hi Petra - if you want the official figures updated daily go to the Financial Conduct Authority website and look for 'notification and disclosure of net short positions'. Holders of positions above 0.1% (lowered due to CV volatility) have to report to the FCA not Shorttracker or London South East who are just tapping into the FCA figures. I see Shorttracker show that they went to 5.2% in June which I missed on official reports so if correct you're right to point out that they have come down from that figure.
I just hope there is a crazy short squeeze so all these B....... get burnt and feel our pain.
https://www.shorttracker.co.uk/search/
Shedulike - You say "Not updated on here but Polygon increased their short on 6th Aug" but when I look on the above short tracker web site it shows that Polygon Decreased their short position on the 6th Aug. Can you show where you got your information from please.
Not updated on here but Polygon increased their short on 6th Aug, Citadel must have crossed the reportable threshold or opened a new short reported on the same day. Guess they anticipated the votes result and are betting on the corporate uncertainty. Just have to hope the interims reflect the early power of POX and the new flotation capacity isn't delayed by all the hoo-ha!
Yes it did rusty be honest..... Any ways I respect you highly for the history and stance that you give the board.....
Stick to that and leave the global economic money flow to others..... Loves you xxx
David the grim, No it didnt, too busy at work at moment too read the posts. Only read it after my post. Jusr trying to get it in my head at first.
Rusty.... I think your dreams came after my earlier post.... Its an obvious analysis
It‘s because they know, dividends are coming ;) Maybe
Agree rustybucket,...shares are more liquid.
BW
Yep.... Agreed rusty, liquidity is a severe issue at the moment and it will get worse, the bond market is paying negative rates.... Theres no income for the finance houses, they will be forced in to private equities and commodities, thats 10x the amount in capital in the bond market when compared to private equities....
He who laughs last......
Having a think of this last night, I can now see a reason why people might want to convert. They are converting at much lower price than prevailing share price, and if they are having liquidity issues, they might need to release some cash. Probably not a choice they want to do, but maybe a necessity.
I honestly can't see any reason for converting bonds to shares now, there is less protection and loss of coupon.
Anyone who has a few convertible bonds and wants shares in exchange, I will be only too happy to oblige.
Lawrence,
Our main debts are the two Bond Issues.
$500m Ordinary Bond due Nov 2022.
$42.8m of the $125m Convertible Bond due Jul 2024 ($82.2m have been converted to shares).
Therefore Bond debt remaining = $542.8m.
Whether POG have again borrowed money from Gazprombank against future deliveries of gold may not become clear until the next Annual Report, as in the past they have not declared this as debt, despite paying a hefty rate of interest.
Perhaps the new BoD and Auditors will record all borrowings as debt - who knows?
What puzzles me is why Credit Suisse have chosen to convert $2m worth of bonds for shares since the EGM?
Thanks Petra
I think the debt is about $500,000,000
Maybe 0.22% extra shares is more accurate.
I doubt if this small amount of extra shares would relate to the drop in the share price (about 0.27% extra shares, I think).
Well its said that taking the shares option, adds to and dilutes those currentl out there but by the same token reduces debt. Anyone know the running current debt figure?
We know the reason for the drop now
Issue of Shares
Petropavlovsk PLC ("Petropavlovsk" or the "Company"), has received a Conversion Notice (the "Notice") from Euroclear Bank SA/NV on behalf of Credit Suisse Securities (USA) LLC, in respect of the exercise of conversion rights under the Group's US$125m Guaranteed Convertible Bonds, due in 2024 (the "Bonds").
The principal amount of Bonds in respect of which the Notice have been served totals US$1,200,000, which, at a fixed exchange price of US$0.1350 per ordinary share, will result in the issue and allotment of 8,888,888 new ordinary shares.
The Company has agreed to issue the new ordinary shares and an application has been made for 8,888,888 new ordinary shares of the Company to be admitted to the Official List and to trading on the London Stock Exchange ("Admission"). Admission is expected to be granted on or around 24 September 2020.
Following Admission, the total issued share capital of the Company will increase to 3,921,714,701 ordinary shares. This figure may be used by shareholders as the denominator for calculations by which they will determine whether they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.