PM why not buy 3,076 shares on open market around $.52 instead of Rights? Why is stock trading aroun | NAVB Message Board Posts


Navidea Biopharmaceuticals, Inc.

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Msg  37760 of 38231  at  8/13/2022 4:49:29 PM  by

moneyonomics

The following message was updated on 8/13/2022 5:09:14 PM.

PM why not buy 3,076 shares on open market around $.52 instead of Rights? Why is stock trading around $.52 to $.54 last few days..One reason maybe that is the average discounted NPV range of the Rights Common and Warrants for sellers buying rights

     
   Great PM question..restated Why not just buy 3,076 shares at current prices of $.52 to $.54 share instead of selling and buying Rights at current .65/.70?
 
 
1. The US  tax deduction for selling a stock at a loss effectively reduces the buy cost  by tax savings.  I do not know the average buy cost of everyone and their tax brackets, but running an average of $2.00 to $8.00 share buy cost and a 20% tax bracket, puts the "net" value of the .65 rights around another 20% lower  or .65 less .13 prices at .52 again or a wash at .52 to .54,
 
2. Also on the warrants cost of buying that many shares now at .52 to .54 is a time value of money question.  If your cost of capital and conversion period is anywhere from 2 to 5 years and depending on your cost of capital between 6% to 10% .52 to .54 is a wash.  see below
 
 So could that hypothetically be how/why market is pricing it at the .52 to .54 range  on a NPV wash range, could be but that is just one possibility
 
 So boils down to the major advantages of Rights is the anti dilution that you cannot beat buying on open market. If they fund again anytime on Common Rights (no expiration found) below .65 you  get more Common Right shares (as long as have not yet converted)  at no additional cost, plus Warrants expire in 5 years but anti dilution can last up to 7 years if diluted within 5 years noting the $2.10 share price option.  Plus the Transaction and Cashless and BR features add other minor protections, but primarily the anti dilution tips the scale to sale and buy Rights and the .65/.70 is not yet final as can still be lowered.. (Caveats always in place: the Board can amend the terms of I preferred any time and tax events suggest may be advantageous to hold in a non taxable account at conversion or for dividend treatment unless prefer a stepped up bases at death gift)  
 
 
 Value Difference on Common Rights around 20% to 24%
 
 
 
 Common rights

Anti-Dilution Adjustment. If, at any time while the Series I preferred stock is outstanding, we sell or grant (or announce any offer, sale or grant) of any shares of common stock or common stock equivalents entitling any person to acquire shares of our common Stock at an effective price per share that is lower than the then conversion price (such lower price, the “Base Conversion Price”), then the conversion price will be reduced to equal the Base Conversion Price. The Base Conversion Price may not be less than $0.16. In addition, no conversion price adjustment will be made in respect of the following exempt issuances (each, an “Exempt Issuance”): (i) shares of common stock or options issued to employees or directors of our company pursuant to a plan, agreement or arrangement approved by the Board; (ii) securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Certificate of Designation, provided that such securities have not been amended since the date of this Certificate of Designation to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (other than in connection with stock splits or combinations) or to extend the term of such securities; (iii) shares of Common Stock, options or convertible securities issued as acquisition consideration pursuant to the acquisition of another entity by the Company by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement, provided that such issuances are approved by the Board and that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith until the 180th day after the date of this Certificate of Designation, and provided further that any such issuance shall only be to a Person (or to the equity holders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities; (iv) shares of Common Stock, options or convertible securities issued in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements or strategic partnerships approved by the Board, provided that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith until the 180th day after the date of this Certificate of Designation, and provided that any such issuance shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities; and (v) shares of Common Stock issued in connection with the issuance of bona fide commercial bank debt or equipment lease transactions, provided that such issuances are approved by the Board and that such securities are issued as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of any registration statement in connection therewith until the 180th day after the date of this Certificate of Designation.

 Warrant Rights 

Anti-Dilution Protection

 

If, at any time after the initial exercise date of the warrants until the two (2) year anniversary of the initial exercise date, we sell or grant (or announce any offer to sell or grant) any shares of common stock or common stock equivalents entitling any person to acquire shares of our common Stock at an effective price per share that is lower than the then exercise price (such lower price, the “Base Share Price”), then the exercise price will be reduced to equal the Base Share Price. The Base Share Price may not be less than $0.16. In addition, no conversion price adjustment will be made in respect of an Exempt Issuance.

 

Series I Preferred Stock

 

Each share of Series I preferred stock will be convertible at the option of the holder at any time, into the number of shares of our common stock determined by dividing the $1,000 stated value per share of the Series I preferred stock by the conversion price of $0.65 per share, subject to adjustment.

 
 
 
 
 
 
 
 
 
 
 
 
 
 


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