"Upon the full exercise of all the Warrants, the estimated proceeds will be S$20.6 million (or approximately RMB100.9 million). After deducting expenses for the Proposed Bond and Warrant Issue, the aggregate net proceeds from the Bond Issue and full exercise of all Warrants is estimated to be S$41.0 million (or approximately RMB200.8 million).
Don't confuse net proceeds with subscription price. Subscription price is the amount you pay to subscribe to a bond. In this case it was 100.5 million, way below par value of 134 million.
Time to stop being in denial and face the facts. Effective 30% interest rate.
Bond amount is RMB 134 mil, which is the principal amount. The quarterly coupon payment is RMB 6.7 mil for 12.5% p.a, hence for two years, the total interests are RMB 53.6 mil.
in short, borrow RMB 134 mil but full payment (including interests at end of two years) are RMB 187.6 mil.
At the same time, the company is also issuing warrants to the bondholders at an exercise price of 25 c. Warrants have an expiry date, which I think has not been stated yet. Usually, you won't exercise a warrant, if the market price is below the exercise price. A rational bond investor will only exercise the warrants if the market price exceeds the exercise price.
so in short, the max amount Eratat will raise will be RMB 134 (fixed from loan) + RMB 100.9 mil (from warrants, which is a varying amount, depending on how many warrants are exercised), which is equal to RMB 234.9 mil. Paperwork expenses for this fund raising will be RMB 234.9 mil - RMB 200.8 mil = RMB 34.1 mil, which is a reasonable amount since investment firms earn around some % from the fund raised.
I'm afraid I think you are confusing yourself. Let's look at the quote on net proceeds again.
"Upon the full exercise of all the Warrants, the estimated proceeds will be S$20.6 million (or approximately RMB100.9 million). After deducting expenses for the Proposed Bond and Warrant Issue, the aggregate net proceeds from the Bond Issue and full exercise of all Warrants is estimated to be S$41.0 million (or approximately RMB200.8 million)."
If warrants are fully exercised, we get 100.9 million. Aggregate proceeds from bond and warrant issue, assuming full exercise is approximately RMB 200.8 million. This figure makes sense if you consider that only 100.5 million would be paid for the bonds, and you deduct expenses. If they are receiving 134 million for the bonds, (which is not the case when you refer to the subscription price of 100.5 million, not 100.9 million which refers to net proceeds in the case of full warrant subscription), how is it possible that the aggregate net proceeds from bond issue and full exercise of warrants would be ONLY 200.8 million? Do the maths Newbiestock.
100.9 mil is for the warrant, nothing to do with the bond.
there is also expenses to be deducted...
Skeptic wrote: Newbiestock,
I'm afraid I think you are confusing yourself. Let's look at the quote on net proceeds again.
"Upon the full exercise of all the Warrants, the estimated proceeds will be S$20.6 million (or approximately RMB100.9 million). After deducting expenses for the Proposed Bond and Warrant Issue, the aggregate net proceeds from the Bond Issue and full exercise of all Warrants is estimated to be S$41.0 million (or approximately RMB200.8 million)."
If warrants are fully exercised, we get 100.9 million. Aggregate proceeds from bond and warrant issue, assuming full exercise is approximately RMB 200.8 million. This figure makes sense if you consider that only 100.5 million would be paid for the bonds, and you deduct expenses. If they are receiving 134 million for the bonds, (which is not the case when you refer to the subscription price of 100.5 million, not 100.9 million which refers to net proceeds in the case of full warrant subscription), how is it possible that the aggregate net proceeds from bond issue and full exercise of warrants would be ONLY 200.8 million? Do the maths Newbiestock.
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