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Microcap & Penny Stocks : Microvision (MVIS)
MVIS 0.940+3.3%Dec 19 9:30 AM EST
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To: JOHN A. who wrote (1277)7/23/1998 12:53:00 AM
From: Stephan Gregory Chase  Read Replies (1) of 7720
 
John,

The call provision is a device to ensure that at some point all of the warrants are exercised. One of the purposes of the warrants was to provide a built in second offering for the company. 2.25 million warrants times $12 equals $27 million. If the warrants aren't exercised, then the Company doesn't get the money, so the Company had to build in a mechanism to force the conversion.

I don't know whether the warrants are undervalued or not, although some have speculated on that. However, one way to look at it is this. Assume at some point the stock is trading at $24.00. That would be 108.7% appreciation from today's close of 11 7/16. Now, if the stock is trading at $24.00, the warrants would be trading at a minimum of $12.00, which would be a return of 178.3% over today's close of 4 5/16.

So, you have to ask yourself whether the additional return is worth the additional risk.

Stephan

btw the terms for forced conversion are 20 days at $24 or more.
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