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GREG has notified the CSE that it has purchased over 500K of CLPL shares over the past week at prices above 92/-.
The time for conversion of CLPL.W002 are nearing. The conversion price per warrant is 102 (Which means that a warrant holder has to pay another 102 rupees to convert it to a share). If we assume that (God forbid!) the price of a warrant drops to 0.10, still the price of the N.0000 would have to be at least 102.10 for a conversion. Any price below this and the warrant does not get converted. This means that the company loses out on a lot of interest-free capital in addition to a loss of investor credibility. The left over warrants may be taken up by GREG as the majority shareholder to save face. They too would have to pay 102 when they could have collected it from the market for 85/= during the past week.
So what is the best option for GREG and CLPL - it buys up shares from the market driving the price beyond the conversion price. To convert, the warrant holder would also expect a buffer margin as it cannot risk the price dropping to below 102 as soon as they have paid for the conversion. (The investors do remember the crazy price swings of these shares) So a realistic price would be the conversion price (102) + price of W0002 in the market (17) + a premium. This would still be cheaper for GREG than to put up the money to buy any remaining shares. (A little bit like how the price of reef.N000 was kept above 90/- till the mandatory offer expired!)
I wonder whether this action by GREG does not constitute manipulation. They have acknowledged buying the shares. If one saw the pattern of purchase - it was one huge market order for all shared up to 99 rather than a quiet collection at 85! This pattern usually occurs only if the purchaser wants to pump up the price. It is also blatantly obvious who stands to gain from this upsurge in price under the present circumstances.
There is also a rumor that GREG is selling its warrants and buying normal shares before the conversion date - However there is no such announcement and the purchase announcement was evident immediately. Also even a later announcement of dumping warrants would be unfavorable to GREG in view of all of its other outstanding warrants.
However all of this manipulation is useless if GREG does not push the price up to a tempting value. I am sure that it would expect to be helped in this regard by our rally-chasing investors!
This is for discussion purposes only. For gods sake please do not jump in head first without analyzing the pros and cons. Please do not forget that this is a time of bearish market sentiments and that the price of a share is much more likely to drop than rise!
The time for conversion of CLPL.W002 are nearing. The conversion price per warrant is 102 (Which means that a warrant holder has to pay another 102 rupees to convert it to a share). If we assume that (God forbid!) the price of a warrant drops to 0.10, still the price of the N.0000 would have to be at least 102.10 for a conversion. Any price below this and the warrant does not get converted. This means that the company loses out on a lot of interest-free capital in addition to a loss of investor credibility. The left over warrants may be taken up by GREG as the majority shareholder to save face. They too would have to pay 102 when they could have collected it from the market for 85/= during the past week.
So what is the best option for GREG and CLPL - it buys up shares from the market driving the price beyond the conversion price. To convert, the warrant holder would also expect a buffer margin as it cannot risk the price dropping to below 102 as soon as they have paid for the conversion. (The investors do remember the crazy price swings of these shares) So a realistic price would be the conversion price (102) + price of W0002 in the market (17) + a premium. This would still be cheaper for GREG than to put up the money to buy any remaining shares. (A little bit like how the price of reef.N000 was kept above 90/- till the mandatory offer expired!)
I wonder whether this action by GREG does not constitute manipulation. They have acknowledged buying the shares. If one saw the pattern of purchase - it was one huge market order for all shared up to 99 rather than a quiet collection at 85! This pattern usually occurs only if the purchaser wants to pump up the price. It is also blatantly obvious who stands to gain from this upsurge in price under the present circumstances.
There is also a rumor that GREG is selling its warrants and buying normal shares before the conversion date - However there is no such announcement and the purchase announcement was evident immediately. Also even a later announcement of dumping warrants would be unfavorable to GREG in view of all of its other outstanding warrants.
However all of this manipulation is useless if GREG does not push the price up to a tempting value. I am sure that it would expect to be helped in this regard by our rally-chasing investors!
This is for discussion purposes only. For gods sake please do not jump in head first without analyzing the pros and cons. Please do not forget that this is a time of bearish market sentiments and that the price of a share is much more likely to drop than rise!
Last edited by prasrod on Wed Jun 29, 2011 11:02 pm; edited 1 time in total (Reason for editing : to make it less crowded)
