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02/07/19 4:45 PM

#328557 RE: ssc #328556

Yes someone had to sell them. My guess it's a market maker that has shares in their inventory. Otherwise I don't know.


02/07/19 4:45 PM

#328558 RE: ssc #328556

The shares are, I believe, oversubscribed.

Here's how it works:

Offor and friends of Offor buy let's say 3 billion shares.

Then short sellers borrow some of those shares from offor's and friends' brokers and sell them. Let's say 1 billion of these shares are borrowed and sold, as an example.

A small group of shareholders in America buy them.

So now the total ownership is 4 billion shares (in this example) even though the AS is only 3 billion.

Usually, this is not a problem because short sellers can always offer more money and entice someone to sell to then deliver the shares back to the original owners that they borrowed them from.

But it's a problem now because the small group of shareholders don't plan on selling whether there is bad news (like kosmos winning) or even if there's good news (like kosmos losing)

The small group of shareholders are willing to wait until Total buys out erhc.

This is a big problem for short sellers because the original owners (Offor and friends) need to go to their brokers and ask the broker to deliver the shares to Total to complete the buy out at let's say $7 a share that Total would be willing to pay (again this is just an example).

So those brokers must turn to the short sellers and ask them to return the over subscribed shares.

To do this, short sellers must buy the shares from that small group of shareholders, except if that small group is not selling because they want to be part of total... the short sellers are stuck.

To get unstuck, the short sellers will have to offer the small group of shareholders MORE than Total's offer in order to entice them to sell so that delivery can be made. Perhaps, in this example, short sellers actually pay $8 a share instead of $7, which total is offering.