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Criteo SA Message Board

  • beameup_999 beameup_999 Dec 3, 2005 3:22 PM Flag

    Warrant Questions

    Let me first suggest that anyone who is not knowledgeable about warrants go to the library and check out a book or books on the subject. Do not trust others on this board to educate you as they may need education also.

    The warrants you receive upon Mir's emergence from BK will be pegged to a strike price and will be valid for a set number of years. In the case of these specific warrants the term is 5 years and the strike price has yet to be set since the total number of shares has yet to be set. In your example of a $30 stock price and a $25 strike price, the warrants will be "in the money" by $5. Also they will have a time value of somewhere near $5 to $6, for a total value of $11 to $12. However, the market will set the time value once the warrants begin trading.

    You will not need to buy the stock in order to exercise these warrants. The POR provides for a "cashless" exercise of the warrants. Learn about warrants, as these will probably be the largest component of your existing stock when it trades after emergence. Remember that the three components are newco stock, newco warrants and a SO litigation tracking vehicle such as a preferred stock or an option.

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    • "I believe there are restrictions to putting new money in an IRA after a certain age."

      I believe that if I sold a position, that is NOT considered a withdrawal. It just means a cash position. So I should be able to purchase another stock. Warrants included. I understand the main differences in the IRAs. But no expert.

      But please, for clarification, do not depend on me, ask the broker's IRA people.

    • SF:

      In your last post you indicated you are over 65. That may have something to do with what they are telling you. I believe there are restrictions to putting new money in an IRA after a certain age. Also rules regarding required withdrawals.

      I am 50 and have a Roth IRA. Like a traditional IRA, I am limited to how much I can contribute a year. Used to be $3,000/year.In 2005 it was bumped to $4,000 + $500 catch-up for being 50.

      The account started out as a Southern Co 401K. When I left GA Power, a Southern CO, in 2002, I rolled it over to a self-directed IRA. When MIR filed BK, I converted the IRA to a Roth IRA.

      I believe the max I can contribute in 2006 is $4,000 + $1,000 catch up for a total of $5,000.

      A Roth uses after tax dollars going in. Grows Tax free like traditional IRA. HOWEVER, all withdrawals are tax free. No required distributions either. A Roth can be passed on to heirs.


    • IMO. Warrants are fairly simple, similar to a long term call option. One does not have to figure out its value, strike price, etc, now. When you get them assigned to your account, the numbers will be known. Also, one need not excercise a warrant. Unless it has an abnormal restriction (not allowed to sell warrants), or unless you want to exercise it to acquire more new shares, one could sell the warrants outright, similar to an option. However, AMTD told me that in my IRA accounts, once I sell it, I will not be allowed to re-purchase it. I would have to purchase it in my regular accounts.

    • Thanks.

      Your "time value" explanation makes good sense and I've never thought of that aspect.

      How many warrants will one share of new MIR receive (or old MIRKQ)?

      At five years, will the warrants magically turn into cash without brokerage fees?

      Headache...must have narcotic analgesics...

    • An apt discussion. Given the 10% ratio to old shares, a value of $11 to $12 would equate to old common value derived from the warrants of $1.10 to $1.20.

    • Beam:

      That is a most excellent summary of the warrant question.


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