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Re: NorCalTommy post# 86280

Wednesday, 11/09/2022 5:21:15 PM

Wednesday, November 09, 2022 5:21:15 PM

Post# of 113436
Tommy; I have to read it multiple times before I think I understand it. They do indicate "May", rather than When, but yes, they can call once it meets the outlined conditions:
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From post 86213

"Once the warrants become exercisable, the Company may call the warrants for redemption (except as described with respect to the Private Placement Warrants):
-- in whole and not in part;
-- at a price of $0.01 per warrant;
-- upon not less than 30 days’ prior written notice of redemption to each warrant holder; and


if, and only if, the reported last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing once the warrants become exercisable and ending three business days before the Company sends to the notice of redemption to the warrant holders."
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Comment: (I think you already know most of this.)

Warrants benefit a company by raising cash in exchange for issuing shares to the warrant holders in this case at the exercise price. ($10.80 IIRC).

It does not benefit the company for the warrant to sit around un- exercised for 5 years which is why the call feature language is in there. If they need to raise cash after 2 years and the share price meets the conditions above, they can "Call" the warrants and in this case, raise $10.80 for 15 million warrants for a total of $162,000,000.

The warrant holders are protected in the sense that they do not have to come up with the cash to exercise the warrant and purchase the shares, its done as a cashless warrant exercise, at which time sufficient shares are sold to cover the $10.80 share cost and the shareholder receives the remaining unsold shares in their account.

Does it limit upside? Maybe depending on when it is called when the price is around $18/share and you exercise you do get approximately $7.00 per share return for your $0.40 warrant investment. If you don't exercise once called then it sounds you will only get $0.01 from the company.

They could wait for a higher S/P before calling, or, if needed, call as soon as the conditions are met.

(I did not work through NEGoodlife's example)
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