READER
ADVISORY
Forward
Looking Statements. This CEO Blog contains certain
forward-looking information and statements within the meaning of
applicable Canadian securities legislation. Certain statements
contained in this blog may contain such words as
“anticipate”, “could”, “Continue”, “should”, “seek”,
“may”, “intend”, “likely”, “plan”, “estimate”,
“believe”, “expect”, “will”, “objective”, “ongoing”,
“project” and similar expressions are intended to identify
forward-looking information or statements. In particular, this blog contains forward-looking statements regarding the Rights
Offering, the amount of funds to be raised
pursuant to the Rights Offering, and may include information perceived by the reader to be expectations regarding the business, operations and
revenue of the Corporation in addition to general economic
conditions. Although the writer believes that the expectations
and assumptions on which such forward-looking information and
statements are based are reasonable, undue reliance should not be
placed on the forward-looking information and statements because the writer can give no assurances that they will prove to be
correct. Since forward-looking information and statements address
future events and conditions, by their very nature they involve
inherent risks and uncertainties. Actual results could differ
materially from those currently anticipated due to a number of
factors and risks. These include, but are not limited to,
competition, and uncertainties resulting from potential delays or
changes in plans with respect to development projects or capital
expenditures and changes in legislation, including but not limited to
tax laws, royalties and environmental regulations, stock market
volatility and inability to access sufficient capital from external
and internal sources. Accordingly, readers should not place undue
reliance on the forward-looking statements. Readers are cautioned
that the foregoing list of factors is not exhaustive. The forward-looking information and
statements contained in this blog are made as of the date
hereof and the writer undertakes no obligation to update
publicly or revise any forward-looking information or statements,
whether as a result of new information, future events or otherwise,
unless so required by applicable securities laws.
I get asked many times, "why are you proposing a Rights Offering to finance RZX"? (Please keep in mind, this is adjunctive to the proposed Debenture Offering that has been arranged)
My answers - not comprehensive by any means:
I also get asked: "When would you receive the funds from Rights Offering exercise"?
My answers - not comprehensive by any means:
- It is a method to allow shareholders that have been loyal to the company for many years, an opportunity to keep their stockholdings non-diluted as a percentage of the outstanding. There are also many other reasons, which I will do my best to describe herein. **As a matter of record, this method is complicated to some, when compared to the typical Private Placement method used for decades in Canada. In other jurisdictions (like Britain or Australia) the Rights Offering is more commonplace.
- It is a liquid method of financing by equity, as compared to the 4-month hold and then the potential "bottle-neck" of supply-demand at the end of 4 months.
- It allows the traders a more liquid entry point to a company that they follow, while at the same time, assisting in the capital flow to the Issuer. **see the following table as a SAMPLE scenario.
I also get asked: "When would you receive the funds from Rights Offering exercise"?
- The funds are available to the Company from the Transfer Agent (Computershare) a few days after the Rights expiry date. **see the following table as a SAMPLE scenario.
- There are certain possible scenarios that would be beneficial to the Company, but are by no means assured. One such scenario is this: A significant shareholder who wishes to exercise is not required to wait to expiry date to exercise, but may exercise at any time during the process, once the Rights are on Record. This scenario may be beneficial to the Company in a situation where the shareholders wishes to exercise a portion of his/her holdings, and hold remaining rights to exercise at or near the expiry date. **keeping in mind that there is a few days prior to expiry date where the other shareholders may be requesting "Step-up Privilege".
I also get asked: "At what price will the Rights trade?"
- That totally depends on the trading price of the common shares during the Rights Offering. **see the following table as a SAMPLE scenario.
- Raising capital is usually easier.
- Acquiring companies.
- Attracting Top Talent.
- Increasing Value of Company.
- Brand Equity.
The following is a SAMPLE scenario. It serves for DISCUSSION PURPOSES ONLY.
This
communication shall not constitute an offer to sell or the solicitation
of an offer to buy securities
IF, AS & WHEN | Date of Press Release announcing Record Date | Ex-Rights trades | Record Date | Expiry Date | Application to trade Warrants | derivative time value | Comments |
Dates | 2017-04-26 | 2017-04-30 | 2017-05-03 | 2017-06-02 | 2017-06-07 | If April 26th is the date of Press Release announcing Record Date then all other dates are relative | |
Common Shares trading price | $0.36 | Trading price of common stock is directly related to the trading price of the Rights, keeping in mind the “Time & Unit Value” | |||||
Rights (6 rts for 1 unit) | no trades | $0.0267 | $0.0267 | $0.0267 | + (time value) | Premium on price of trading of Rights is related to Time and Unit Value perceived | |
Warrants (1 wt. Per unit) | $0.11 | + (time value) | Premium on price of trading of Warrants is related to Time and Unit Value perceived | ||||
6000 | $0.36 | $0.20 | $0.25 | $0.16 | $360.00 | Example: Value of common shares | |
6000 | $0.0267 | $160.00 | Unit Price | ||||
1000 | $200.00 | 6 Rights to exercise 1 Unit. (Unit = 1 common + 1 Warrant) | |||||
$360.00 | $0.00 | If calculation (36 cent stock price equals 2.67 cent Rights value – no time or warrant value included) |
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