Nice read on RGDEF on Yahoo-Stock purchase warrants in CWT/RDX deal...
Was just reading over the GEM lawsuit documents and found this interesting bit in the description of Ridgeline's purchase of Changing World Technologies:
"The consideration for this transaction consisted of $20 million dollars, in the form of a note payable, 25.86 million shares of Ridgeline common stock, and 4.1 million warrants to purchase Ridgeline common stock at a strike price of one dollar per share."
My question is about the 4.1 million warrants. I presume this means that the former owners/shareholders of CWT have the option to purchase up to 4.1 million shares of Ridgeline stock for $1 each. Correct?
So, my questions:
Why would they set the strike price at $1 unless everyone involved thought the stock price would rise above $1 and thus give the warrants value?
What is the duration of the warrants? When does the option to purchase the 4.1 million shares expire?
Do you think that the strike price being set at $1 bodes well for the future share price of the stock? The way I understand it, the stock price has to rise above $1 for the warrants to be worth exercising. If the share price shoots up to $1.50, they can still buy up to 4.1 million shares at $1, paying a total of $4.1 million instead of the 6.15 Million it would cost at $1.50 per share.
When the CWT deal was made in March 2013, RDX stock was in the mid-50 cent range and had been trending downward for the entire prior year. So why would the owners of CWT agree to a strike price of $1 unless they had good reason to believe the stock would ultimately rise above, and potentially well above, $1 per share?
And so we are told this is the golden age
And gold is the reason for the wars we wage U2
