2006 financing, secondary offering dated May 21, 2008.
sec.gov
No new dilution here, just registering the warrants for "Goldstrike" to convert approximzately 10 million warrants into common shares. Until all the financing from the 2005 public offering and 2006 financing gets "unraveled", the small retail investor is on occasion is "Trading against the bank!" There are still 16 million resticted shares that need to be "unraveled" an if you could buy 16 million shares at $1.20, would you? I assume "the company" (restricted holders) brough a considerable amount of cash into the deal in 2006 and will fund their purchase of warrants from selling some common shares. Goldstrike has 22 milion shares of common, and they may sell 2 million shares of common at $5.92 to fund the purchse of 10 million at $1.20.
The warrants from the 2006 financing can be exercised for an average price of approximately, $1.20 / share. All the warrants will be excerised, increasing the number of fully diluted shares from 119 million, as reported in Q1 2008, up to 135 million when all the outstanding warrants and stock options are excercised. The secondary filings are required as, the warrants belong to "corporations" with a greater than 5% ownership in the company, or involve the actions of the company Gran Tierra.
Greywolf (much greater than 5% interest) will often sell (what seems to us as) a boatload of common shares to fund the purchase of warrants. Prior to the 2006 financing, Gran Tierra was spun out of a company called Goldstrike. Goldstrike the company was disolved, although the former principals, still hold (recently held) a material interst in Gran Tierra GTE shares. Any share activity from Goldstike principals (now Gran Tierra) requires a secondary filing.
Sell offs are common, when a large number of shares are registered in a secondary placement. I am making general comments that the terms and conditions of the 2005 spin-out and 2006 financing is not "new" news. I have not had time to read thru the May 21, secondary offering,. The SEC document is clear on the number of shares that "may from time to time be sold" I'm not implying that all of the remainingg warrants and options are eligible to be converted into common shares today, only that with a stike price $1.20 it's likely that at some time in the future, they will be exercised.
119 million shares were reported Q1 2008 and 129 million are outstanding after the May 21, 2008 offering, so it looks like 10 million shares have not and "may from time to time" be excercised. The 129 million shares of common assumes that all of Goldstrikes 22 million warrants will (may) be convereted into common shares. That leaves, about 5 or 6 million in authorized warrants and options, that may be converted into common shares. Gran Tierra will issue a similar secondary placement, sometime in the future, when these 5 - 6 million shares are "in play".
It's anybody guess, how many shares Goldstrike will sell, you can count the volume on the big blocks sells, or check the institutional ownership. You have to research and compare timetables and the last secopndary offering to this one.
Off the top of my head, 13 million warrants were excerised in Q1 2008, taking the outstanding shares from 106 million to 119 million, and it looks like another 10 million warrants "may from time to time" get converted in common shares in Q2 2007. Prior to Costayaco -3 (or 2) ?? much of the activity of the 13 million warrants excercised in Q1 2008, (similar selling / shorting) was done just prior to the well results. C-3. Deja vu, all over again, the same thing is happening prior to the Costayaco -4 well results.
In general, and in my opinion, the conversion of 13 million warrants into common shares was handled well in Q1 2008, so expect more of the same. I for one,would have been concerned had the 13 million warrants been "converted", prior to the well results of C-3 , and then C-3 turned out to be a duster, it wasn't.
I don't try to read too much into this Goldstrike, (or apparent owner of the warrants) needs to raise $12 million to purchase 10 million warrants. In my mind, I assume Goldstrike, is rich in paper and short on cash, so Goldstrike, may sell/ short ,at least 2 million shares of common at $6 / share to fund their $12 million purchase price of the warrants.
Common stock currently outstanding (1) 106,317,127 shares
Common stock offered by the selling stockholders (2) 102,133,821 shares
Common stock outstanding after the offering (3) 129,168,679 shares
(1) Amount is as of May 15, 2008 and includes 11,351,586 shares of common stock which are issuable upon the exchange of exchangeable shares of Goldstrike Exchange Co.
(2) Includes 22,851,552 shares of common stock underlying warrants, and 11,351,586 shares of common stock underlying exchangeable shares, issued to the selling stockholders.
(3) Assumes the full exercise of warrants to purchase an aggregate of 22,851,552 shares of common stock held by the selling stockholders, and full exchange of exchangeable shares in exchange for an aggregate of 11,351,586 shares of common stock, in each case held by the selling stockholders as of May 15, 2008.
BTW, - the term may be sold from time to time means, expect that, the day after the closing date of the secondary, large blocks of shares will be sold. I don't see this as market manipulation, some folks may. I haven't had time to read the secondary placement in detail, Goldstrike may be selling or shorting common shares that are elgible or an institution may be selling or shorting shares to fund (or lock-in) the purchase price of their warrants. Remember, these are the same institutions that provided the $75 million in capital to start the company Gran Tierra.
I may provide some additional comments after reading the secondary offering, please feel free to correct any of my assumptions, or buy the shares that Goldstrike is "putting on the block". I'll continue to note that Gran Tierra's website and financials note 135 million shares fully diluted, the 135 million number hasn't changed has it?
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