(1/6)
That conversion of the #GDR GHIF convertible bond has commenced should come as no surprise to anyone because its existence was clearly sign posted in the 5th May placing announcement.
What is interesting is the conversion price and the cash payment.
5th May RNS ;
(2/6)
"$2.0 million of the GHIF Bond can be converted at 28.75p and the remainder at 150p at GHIF's discretion"
$2m @ $1.27 and 28.75p = 5.48m shares.
$6m @ $1.27 and 150p = 3.15m shares.
Total = 8.63m + interest accrued.
(3/6)
Today's RNS states the full $9.46m (bond + interest accrued), has been converted for 7.1m shares and £685k in cash.
$9.46m @ $1.27 = £7.45m
Deduct the £685k cash payment and its 7.1m new shares at 95.3p a share.
(4/6)
So investors have actually saved 1.53m shares + those shares which would have been issued for the interest not paid in cash.
At $1.46m total interest @ $1.27 = £1.15m - £685k = £464,600.
At conversion price of 95.3p = 488k new shares.
So total saving c. 2m shares.
(5/6)
For GDR to go on and successfully build itself out, be it through Covid test sales or its AIHL test, this convertible loan had to be accounted for, be it as debt or converted.
What we see today is that inevitable conversion but for 2m less shares than previously priced in.
(6/6)
I like GDR as a business and I think their Covid and AIHL tests will do very well.
The AIHL test alone in 2021 can deliver a stronger valuation than we see today.
Today's conversion is a step along the way with debt levels now reduced and interest no long accruing.
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