Tuesday, December 17, 2013

CCM Group

CCM Group: Company is giving 10 bonus warrants for every 1 share held, with exercise price at $0.01 apiece. Each bonus warrant will also entitle the shareholder to one free piggyback warrant upon the exercise of the bonus warrant. The piggyback warrant has an exercise price of $0.011. Several assumptions need to be made at this point. Any changes to the factors listed below may create a wide variance on the calculation of the counter's theoretical value. Do also note that a warrants issue is not immediately dilutive to the mother share. i) The counter has 4 days to go before going XB on 23 Dec. Daily share price variance of 1-10% for the counter on the past five market days shows the level of inaccuracy if we use the current share price of $0.175, as the price before the counter goes XB; ii) Credit date of warrants have not been given by the company; iii) All bonus warrants are exercised immediately upon credit, since the exercise price is at a large discount to the current mother share; iv) All piggyback warrants are exercised upon credit, assuming that they are in-the-money. However for your reference, the calculation of CCM Group's theoretical price could be derived as [($0.175 * 1) + ($0.01 * 10) + ($0.011 * 10)] / 21 = $0.01833

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