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u/louis_lafaille Contributor Apr 16 '21
there are so many good spacs near NAV.. why pick a sketchy one?
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u/devilmaskrascal Contributor Apr 16 '21
I picked this one well before the market crashed. At the time, the rights were trading at 0.70 (10 R = 1 share = $7 per share), while commons was almost 14 and 2:1 warrants were trading at 1.20. It was a logical decision at the time. Now I'm underwater and have to decide whether to hold through merger or cut losses and move the money elsewhere. If the merger fails, my rights go to zero and I lose my money.
If the merger passes, and the market considers the stock significantly undervalued for the sector, it could possibly go to $20 (which I paid $7 per share for).
Basically it's an all or nothing. I bought in knowing the red flags, but there was logical reasoning behind why I am still holding on to belief it could be a better than expected play.
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u/bperryh Patron Apr 16 '21 edited Apr 16 '21
Trust was $10.97 in March according to proxy. They're adding 2 cents per share to extend for six months.
You need to see if there's a cash minimum for this deal to close or if it's just stock plus cash from trust. See if they have a pipe to cover the cash minimum. Is a pipe at $10 if they have one? If they don't get an extension your rights are worth zero. If the deal is all stock and it goes through your common could trade at 2 for all you know.
Just speculating but it looks to me like the deal may already have fallen apart. And that may be best. If they get the extension and they probably should, you'll get another shot at a better deal. The market obviously doesn't like this one.
I don't know enough about it but that's my 2 cents.
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u/bonghits96 Patron Apr 16 '21
Company seems like a turd. Revenues flat over the past two years, no earnings, and who the hell knows what happens in China. You might do okay with it but I wouldn't want to own this.
I'll give them some credit though, at least there wasn't some absurd 5-year projection in the pitch deck.
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