So today a new form was published via the SEC, that explains that every shareholder would get 1 x Warrant pr. 2 x shares they hold on the 9th of Feb.
One warrant allows the holder to purchase 1 x Xerox share for $8 within the next two years.
This part I understand, meaning they are only valuable in this form should our stock increase with 400% over the next 2 years.
The last part is where I’m not sure:
The warrants may be exercised for cash at any time prior to expiration.
What does that mean?
@br Spot on! Employees with critical knowledge are walking out the door. Some are resigning with or without a new job.. Some are retiring (yet have a new job lined up). Employees are walking out the door at increasing rates. This leadership team has demolished any form of faith that they give a thought for employees
If this happened the day before Q4 numbers are released this is not good.
My question is this, they continually run to support the shareholders, take bonuses, raises etc. What have they done for the employees? We haven’t received raises, taken hits on commission, morale is at an all time low. What’s next?
I see this as the last play they have. Where do you go from here?
i have 1000 shares. I'm issued 500 warrants. In less than 2 years the stock goes to $10. I spend $4K to convert my warrants to stock then immediately sell the stock for a $1K profit.
This is the only scenario that its good for the end user. but now... if you're institutional (blackrock vanguard statestreet etc...) and you can do this with millions of shares instead of thousands. you COULD potentially make a little bit of money.
Goodwill Guy here.
WOW this is nuts! There is a non-zero chance this lowers the bond rating by itself, regardless of what numbers come out tomorrow. If this somehow did work, and bondholders take the deal, what happens then? The shares are issued and ~75% more shares are issued and this garbage stock dilutes to ~$1?
The call tomorrow WILL BE WILD!
If they pulled this stunt the day before earnings, the Q4 numbers are worse than expected.
The other option is a bond play.
Basically allowing holders of both bonds and stock to “surrender” their bonds instead of paying the $8 pr. Share.
This will allow shareholders to buy bonds (Xerox debt) at a market rate, and using them as facevalue. I.e. a $100 bond is currently trading at $30. And exercise them immediately.
Basically this is a way for Xerox to reduce their debt, around $600M, assuming bondholders sees the value. Which based on current market rates might not be worth it.
On the other hand it does give shareholders a bonus if the company survives and share price increases to more than $8, again unlikely.
And for Xerox this is a low risk scenario as they just printed the shares needed for this, the damage is already done, now it’s just wether or not the gamble pays off.