Yep. They will survive and stay listed.
I too am amazed. Their underwriter hadn't done many offerings at all, and they clearly struggled to pull this one off.
Old shareholders got hosed, with 6 M new shares and 4 M new warrants, vs. 0.98 M old shares. So the old shareholders are left owning less than 9% of the company. But the company survives.
Earlier this week, when the units started trading, it was clear to me that the co. would not fold immediately, so I bought units to box my short shares. I bought 1 unit per 3 shares short.
In effect, I am now long the warrants.
Market cap is now something like $18 M, or $30 M if you count the warrants as if they were shares. They are nearly in the money, exercising at $4 with the stock at $3.
Overall, a very nice reverse-split play, wasn't it?
The stock fell in half, between the time I shorted at the reverse split and the time I boxed. So I captured a nice profit there. Now I am long the warrants and can enjoy a leveraged ride up, if there is one, with no downside potential since I got the warrants effectively for free. |
