Thursday, December 14, 2006
Position Updates: MVIS
"We are very excited to be engaged with a second global design and manufacturing partner which brings a unique high-volume optical components development and manufacturing expertise for optimization of Microvision's new proprietary IPM technology," said Alexander Tokman, President and CEO of Microvision. "This agreement positions Microvision well to execute on our commercialization roadmap to bring IPM-based products to market with the right levels of performance, quality and cost for high-volume consumer and automotive applications.
"To be successful long term, it is important to have at least two reliable sources of development and potential supply for our display engine because we intend to serve several large commercial markets with multiple prospective global OEMs."
MVISW warrants are currently selling at @ $1.36 per.
I understand their being callable at $5.30/share of MVIS stock.
What happens if MVIS stock goes/stays above $5.30/20 days, etc., and the warrants are called?
Who pays who, and how much?
Are warrants holders then allocated 1 share of MVIS stock for each called warrant, or ????
The warrants have a five year term during which time the holder the right to buy a share of MVIS stock for $2.65.
However, if at any time during that five year term the closing bid price is over $5.30 for 20 consecutive trading days, MVIS can (and will) call the warrants. Since the stock will be trading over $5.30, you'll choose to exercise your option to buy the stock for $2.65. You will wire them $2.65 for each warrnant you own and they'll give you a share of stock.
I don't know how the mechanics of exercising the warrant are handled through and individual online brokerage account.
Keep up the great analysis/comedy
"I am writing to correct a bit of thinking on the warrant comments you had on the blog.
A warrant holder is subject to call at the company's discretion as indicated in your blog as you reference the offering prospectus. However, a warrant holder is NOT necessarily capped on the upside versus those holding the stock. A warrant holder, on the notification by the company to force the exercise, can take several actions:
1. sell the warrant in the open market
2. exercise the warrant, pay the exercise price and take the stock.
The warrant holder is only limited in upside if they choose not to pay the exercise price and sell the warrant before the call is finalized. If the company forces the warrant exercise, the company will receive the cash from the 10.8mm warrants being exercised and will issue 10.8mm common shares. After the call is effected, the warrant will cease to trade. Thus, a holder would not choose to sit and do nothing.
Currently, one could purchase warrants at 0.60-0.65 with an exercise of 2.65, or a total potential cost of 3.25-3.30. Why purchase the warrant vs. the common stock? Answer - either more leverage or less downside risk (in dollar terms for the same number of shares)."
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