Monday, December 23, 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. A warrants issue is not immediately dilutive to the mother share. Further, the credit date of warrants have not been given by the company at this point. Do note that several assumptions need to be made for the calculation of the theoretical value post XB: 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. The calculation of CCM Group's theoretical price could be derived as [($0.163 * 1) + ($0.01 * 10) + ($0.011 * 10)] / 21 = $0.0178

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