If the PP has a ceiling on the price, as well as a floor, the PP investor has much to gain if the company has explosive potential.
Which means that not only do they get the 30% discount but everything between the ceiling price in the formula and the new and improved very high trading price.
Let's say that the price was to go to $50. Let's also say that the ceiling price is $3.
At a 30% discount the PP investors could convert to a multiple of common based upon share value of $3 less 30% which equals $2.10 then used as a divisor into the amount of money in question. Let's say at that point $2,100,000, which in turn equals 1,000,000 shares.
Ordinarily this would be nice, still would be better if the share price was lower because the common yield would be higher, but if the share price is $50 that would not be anywhere's near as good.
Because the investor would now have 1,000,000 shares worth $50,000,000 for a 2.1 million dollar risk.
The incentive for the PP investor in this circumstance is to allow the price to float to its maximum potential. Maybe even bring some business to the company during the process.
The question is, is TSIG a potentially explosive situation.
I think so. But I would still like to see the goddam PP formula.
sword |
