Its ok.... Time will tell. I believe many vested here are old hand investors. All tookdue diligence to get relevant info of d company and did our homework
Anyway the deal is done. No pt dwell into it further
If the company wishes to hv the warrant exercised n hope to utilise the warrant fund, then i think we can expect a "magical rocketing of their shaee pruce"
At 25c exercise price, minimum i believe the share price has to be pushed beyond 30 c to entice the warrant holders to exercise it.
As long as share price up, i guess most ppl here shld hv no complaints since we all hv been accumulating it under 15 c.
The company will received RMB $100.5 mil for the bonds. They need to pay back principal amount of RMB $134 mil ([my personal opinion only] this amount I suppose already factor in the interest amount). See financial effects of the announcement, total borrowings is RMB $134 mil.
If you work backwards,
RMB $134 mil - RMB $100.5 mil = RMB $33.5 mil
If you look at company side:
The company actual interest amount per annum is RMB $33.5 mil / 2 = RMB $16.75 mil
The company actual interest rate per annum is RMB $16.75 mil / RMB $100.5 mil * 100% = 16.67%
If based on principal amount to calculate interest rate of the bonds per annum:
RMB $16.75 mil / RMB $134 mil * 100% = 12.5%
RMB $16.75 mil * 2 = RMB $33.5 mil
RMB $100.5 mil + RMB $33.5 mil = RMB $134 mil
Somehow it adds up perfectly.
In my personal opinion only, I do not think 1)the company is desperate enough to take up a 33.33% interest rate bonds when they can borrow from banks at a lower rate and 2)to pay such a big price (borrowing RMB 100.5 mil just to pay interest of RMB $67 mil) to destroy shareholder value and 3)to enter to a lousy deal for the subscriber 's network and 4)said the bonds and warrants (may or may not be exercised at 0.25) can strengthen its cash position:
"strengthen its cash position to grow its business and its access to new contacts and opportunities through the Subscriber’s network, thereby increasing exposure of the Company’s shares to new investor communities, funds and financial institutions in Hong Kong and the PRC."
If the later case is true (discount RMB $33.5 mil + 12.5% of RMB $134 mil),
the interest amount for 2 years is RMB $33.5 mil + RMB $33.5 mil = RMB $67 mil
Interest rate per annum is RMB $33.5 mil / RMB $100.5 mil * 100% = 33.33%
RMB $100.5 mil - RMB $67 mil = RMB $33.5 mil
That really a big price to pay for a Subscriber’s network unless there are other benefits we do not see now.
Question:
Does companies usually factor and display the interest amount together with the loan amount under the total borrowings under financial effects?
I think best is someone send an email to sgx to ask eratat for clarification and clear all shareholders and potential investors doubts.
My interpretation is similar to yours based on the documents.
The 12.5% figure is exactly as yours, except I calculated the interest on the subscription price using compounded interest, and so got the 15.45% number.
Adding additional interest from nowhere - which was the assumption that is flawed by the value buddies calculations was what I was against. To say that the effective annual rate (EAR) is 30% is utter nonsense.
Skeptic: you should really know your methods and facts first before trying to push newbiestock into a corner. Your premise for calculations is wrong. Stop forcing it onto others. At most, just claim it as your interpretation and stop forcing it unto others.
Didnt spot the subscription amount and the principal amount.
My mistake, skeptic !!!
But part of the amount difference between RMB134 mil and RMB 105 mil will include the paperwork expenses plus the marketing needed for the bond investor. Actual psperwotk expense figures not stated.
Tactician wrote: Hey GEO,
My interpretation is similar to yours based on the documents.
The 12.5% figure is exactly as yours, except I calculated the interest on the subscription price using compounded interest, and so got the 15.45% number.
Adding additional interest from nowhere - which was the assumption that is flawed by the value buddies calculations was what I was against. To say that the effective annual rate (EAR) is 30% is utter nonsense.
Skeptic: you should really know your methods and facts first before trying to push newbiestock into a corner. Your premise for calculations is wrong. Stop forcing it onto others. At most, just claim it as your interpretation and stop forcing it unto others.
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Just to think of 30 cents, or even 25 cents, is enough to make me dance.