marketmaker suckered 9500 shares to sell on this news. Shame on him. Trade-able warrants are like a 5 digit stock symbol. The right to buy shares at a discount (yet to be priced). Or you can sell those warrants for cash.
And I'm sorry for those posters for not tuning in. You see I have found no reason to read this board for everyday bs from the likes of marketmaker79 the board troll. What ever happened to his predecessor id pultimon or something like that?
he's right - anyway you put it this offering is damaging management's credibility heavily - why announcing a giant equity offering allegedly required by HK stock exchange listing rules one day after having its quarterly conference call where they would have been able to explain this topic to the financial community ? Instead they decided to release this secretly one day later on a Friday afternoon just ahead of the memorial weekend. This is very telling in my opinion.
much worse the offering is effectively structured as a huge cash-out for major shareholders as they get paid back their long standing zero interest credit line which will be replaced by dividend hungry new equity.
they could have done this just by converting the credit line to equity at market prices or even at a premium whoch would have sent a huge sign of confidence to outside shareholders. Instead they will offer around 50% new shares at a heavy discount with the major shareholders obviously not aiming to exercise their right in the offering (this would have been otherwise stated in the release just like they disclosed the pro forma backstopping of the offering).
- management's credibility at least damaged if not destroyed after telling the financial community just one day before that there would be no dilution and there's nothing new with regards to the HK listing
- major shareholders cashing out
- business risks transferred to outside shareholders
- major dilution of around 50% with NO benefit to the company - cage capital won't rise, so earnings per share will also be diluted
- the mechanics of the rights offering will put huge additional pressure on the share price in the days preceding the price determination
- would expect analysts to be extremely disappointed by this news with price targets reduced heavily or the stock even to be downgraded.
I'm wondering why you think the major shareholders are not going to exercise their own rights since they seem to have effectively pledged to buy the shares underlying the unexercised rights of other shareholders? What am I missing?
"Certain of AERL’s current shareholders are expected to agree to purchase any ordinary shares underlying unexercised rights. Some of the shareholders agreeing to purchase such shares hold the indebtedness that will be repaid with the proceeds of the rights offering. No consideration is expected to be paid to these shareholders for their agreement to purchase these shares."
free money is not bad....the problem is, that free money will go to those scammers and not to you...and most funny is it is your money. You defend now those who robbed you...they must laugh their a... off! :)