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| Subject: Questions answers concerning convertible listed notes. | |
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Author: Nickat questions reply.michaelirish1Jan 24 2003 |
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Date Posted: Thursday, January 23, 11:57:59pm Posted by: nickat Jan 24 2003 10:05:07:420AM Reply to post #3798 by michaelirish1 Guys, ----------------------------------------------------------- Can somebody verify or correct me on my views on convertible notes. (I know this issue has been discussed in depth before but it will take me forever to find the posts) ----------------------------------------------------------- Assuming notes are purchased at $7.60 each and are worth 90 ERG shares, then it is the equivalent of purchasing ERG at 8.5 cents. ----------------------------------------------------------- If ERG share price say goes up to 20 cents at the time of the EGM, then after the restructure the converted shares will also be worth 20 cents. Consolidation of 8:1 happens and shareprice is $1.60. ----------------------------------------------------------- Based on this (assuming that I havent mucked it up) I have a couple of questions: ----------------------------------------------------------- 1) Are there any limitations which prevent you from selling ERG IMMEDIATELY after your notes are converted? 2) Are there any differences with regards to Capital Gains Tax? 3) Are there any issues with liquidity, can the be sold at anytime before the restructure? Advantage over shares: - ERGG discounted to the current share price. - OTHER??? Disadvantage: - cannot trade notes like you could the shares. (not sure about this???) - OTHER??? If anyone can elaborate and/or correct me if I have misunderstood this then I'd appreciate it. ------------------------------------------------------------ Cheers,Nick ------------------------------------------------------------ Reply. ------------------------------------------------------------ Posted by: michaelirish1 Jan 24 2003 1:07:41:420PM Reply to post #3799 by nickat Go to Post # ------------------------------------------------------------ Nick ------------------------------------------------------------ I have answered your questions as follows (1) I included your post (2) Gave my answer Can somebody verify or correct me on my views on convertible notes. (I know this issue has been discussed in depth before but it will take me forever to find the posts) ------------------------------------------------------------ Assuming notes are purchased at $7.60 each and are worth 90 ERG shares, then it is the equivalent of purchasing ERG at 8.5 cents. That is correct. If ERG share price say goes up to 20 cents at the time of the EGM, then after the restructure the converted shares will also be worth 20 cents. Consolidation of 8:1 happens and shareprice is $1.60. I thought consolidation was 10:1…ie $2 Are you confusing the rights issue (1:8) and the consolidation (1:10) ------------------------------------------------------------ Based on this (assuming that I havent mucked it up) I have a couple of questions: ------------------------------------------------------------ 1) Are there any limitations which prevent you from selling ERG IMMEDIATELY after your notes are converted? I do not know of any. ------------------------------------------------------------ 2) Are there any differences with regards to Capital Gains Tax? Yes CGT is applicable on theface value- purchase price …Ring ATO 3) Are there any issues with liquidity, can the be sold at anytime before the restructure? Yes..it is happening now ------------------------------------------------------------ Advantage over shares: - ERGG discounted to the current share price. - OTHER??? Gets interest if they are not converted ----------------------------------------------------------- Disadvantage: - cannot trade notes like you could the shares. (not sure about this???) Who said this? - OTHER??? ----------------------------------------------------------- If anyone can elaborate and/or correct me if I have misunderstood this then I'd appreciate it. ----------------------------------------------------------- Cheers,Michael ----------------------------------------------------------- [ Next Thread | Previous Thread | Next Message | Previous Message ] |