China Ceramics Co. Ltd. (CCLTF)

[viking86]

Thanks for clarifying the cashless option. It would be great for warrant holders to convert w/o paying anything extra at a cost basis of max 3.92! In this case, the "half" diluted O/S will be approx.:

12.5M + (14.6M/2) = 19.8 M shares (instead of fully diluted= 27.1M shares)

and the 2010 eps at earnout will be:

36.8 / 19.8 = $1.86 (instead of $1.36)

Assuming a share price of $15, the adj. PE will be:

15/1.86= 8 (cashless option)

For comparison, a PE of 8 in the fully diluted case (warrants redeemed for $5/sh) would yield a share price of only $13.6. Thus cashless means faster price appreciation since the diluted eps will be comparatively greater. Now I see why you said Mgmt may prefer the cashless option since they dont really need the extra cash.