Think of it this way:
1) You by a warrant. for $4.50
2) You can sell it now but you only get $4.50.
3) Suppose merger date comes and we are at today's prices.
4) Now you can demand to convert your warrant to stock by paying $11.50 or
5) You can sell your warrant for $20.50 - $11.50 = $9.00 each
Therefore the warrant price has to close the gap from $4.50 to $9.00 sometime before merger date. On the other hand, if the stock price drops before merger date it may only be worth $4.50
Incidentally, this is not uncommon. Look at ACTC and you will see the same thing. The company does not need to worry about creating stock to cover the warrants until we get to conversion day. Them they have to face the music. With real options you have to keep it close all the time because they can be executed anytime.
Recent EVGO News
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