I hope everyone here realizes that today's 8-K was nothing but shareholder friendly ......
If you truly don't realize this and have no idea how to read an 8-K, you shouldn't be making investment decisions on your own. The worst thing that can happen as a result of this 8-K is that everything remains as is. The best thing that can happen is warrant holders decide to take the deal and then the outstanding share count will drop by over 600K shares. Today's initial sell-off on release of the 8-K indicates to me that most of the folks in this stock have no clue about what they own. Look at the 8-K as a gift if you weren't in the stock and wanted shares. Merry Christmas !!
There is a scenario in which this is demonstrably good for all shareholders, not just the warrant holders. If MGT has reason to expect a cash windfall in excess of $85 million, this is a brilliant move on the part of the CEO that benefits every single shareholder. That number is actually toward the low end of some of the predictions I have seen re: MGT's lawsuit re: its IP.
See my analysis on iHub.
Simplifying the capital structure would also make it easier to spin off a royalty trust to shareholders (after a prospective settlement) and have MGT transition to an operating company in the online fantasy gaming space (possibly with a casino partner?) .
I looked at this all day and the more I looked, the more I liked it. The CEO could be telegraphing big things here.
One further point - I don't think you file an 8K like this out of the blue just HOPING that a few warrant holders will bite. They almost certainly have floated prospective terms past Hudson and Iroquois and have reason to believe that the 1/3, 2/3, 5/8 structure of this deal is going to be accepted.
And let me also add that if warrant holders do take the deal, all the pressure that's been on the stock will be eliminated and this thing will absolutely fly. Had the selling pressure in the last 2 weeks not been persistent, we'd already be at $10.00 by now.
That's right - this is much better than the fundraising alternative of issuing shares in a private transaction to raise cash while leaving the warrants in play. In this case the warrants are converted into shares - which would have happened anyway - and the company banks $9.24 million while only exposing shareholders to an additional 500K shares on a fully diluted basis.
I like this move and am anxious to see how the company uses the capital.