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Gold/Mining/Energy : Sandstorm Gold
SAND 12.120.0%Oct 24 9:44 AM EST
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To: PaperPerson who wrote (484)6/14/2011 12:42:46 PM
From: PaperPerson   of 1133
 
SSL,based on their june presentation, could decide to raise additional capital by giving warrant holders a deal they could not refuse. this is my own conjecture.

in the presentation the company footnoted that they would receive c$87 million if both of their two classes of warrnats were exercised. Both are now in the money. the 2014 warrants have a u.s. 60 cent strike and the 2015 warrants have a u.s.$1.00 strike.

in the past, to clean up a complicated book of warrants, goldcorp cooked up a deal for warrant holders where you could turn in your old warrant and get new ones.

in this case, SSL could incentivize warrant holders of their two outstanding warrant issues to write checks for stock by offering the following:

buy the stock early at the stated strike prices of u.s. 60 cents and u.s. $1.00 with the sweetener that you would receive a new warrant as well, with a longer expiration and a higher strike price.

maybe new warrants expiring in 2015 and 2016 respectively and with strikes of c$1.30 and c$1.50 respectively?

This would allow SSL to finance more growth without the kind of dilution implicit in a fresh stock offering.

the warrants are already counted as part of the fully diluted shares outstanding. by issuing new later-date warrants as an incentive, you would be creating the possiblity of raising more money later at a higher price than the stock, which is non-dilutive to current shareholders. plus youd get the immediate cash infusion, the $87 million.
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