RE: Great news21 May 2025 13:52
Hi GoldenL , just to clarify in simple English ..
GEM may convert… at the lesser of GBP 0.10 per share (“Fixed Conversion Price”) or 100% of the average for the three lowest closing bid prices in the 40 days immediately preceding conversion (“Floating Conversion Price”).”
So What Does This Mean in Plain English?
• GEM can choose to convert at 10p (Fixed Price) or at the average of the 3 lowest bid prices over the last 40 trading days before conversion (Floating Price).
• If the share price is lower than 10p, GEM can convert at that lower price.
Yes — on the surface this can look like a “death spiral” mechanism, but here’s why that’s not the case here:
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1. Shares Aren’t Trading Yet
• Right now, PPP is suspended. There are no closing bid prices to average, so GEM can’t convert at a low Floating Price yet.
• They must wait until shares are re-trading, and even then, there’s a 40-day observation window — meaning no quick convert-and-dump.
2. If Price Rises Post-Relisting – We Win
• If the share price rebounds strongly above 10p after relisting (which is the company’s goal), GEM will either:
• Convert at 10p, or
• Possibly not convert at all until it benefits them more (which delays dilution).
• A strong market response means the Floating Price could actually be higher than current suspension levels, protecting long-term holders.
3. Structured – Not Predatory
• Unlike true death spiral funders who drip convert and dump to drive the price down, GEM has reinstated a £20 million facility and added warrants at 4p — they’re betting on significant upside, not a collapse.
• This is long-term, milestone-based funding, not toxic financing.
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TL;DR for the Group:
• Yes, the Floating Price gives GEM flexibility if the price is lower than 10p, but…
• There’s no trading yet, so no risk of low conversions right now.
• When PPP relists, a strong market response actually benefits shareholders and keeps conversion prices reasonable or even favorable.
• This structure gives us cash + time + momentum without immediately flooding the market.