1933 Industries (CSE: TGIF) accelerating private placement
1933 Industries Inc. (CSE: TGIF) (OTCQX: TGIFF) announces it is accelerating the expiry of certain private placement common share purchase warrants bearing an expiry date of April 24, 2019, May 17, 2019 and June 14, 2019. The Outstanding Warrants will expire on April 4, 2019, and any Warrants not surrendered for exercise on or before 5:00 PM PST on April 4, 2019 will expire unexercised and become null and void.
Warrant holders have been given notice of this change.
At the same time, TGIF is cleaning up its balance sheet. Aside from the warrants now being accelerated, there are additional warrants that can have their expiry date accelerated and a small amount of convertible debentures that will be forced to convert. Although these transactions can be disruptive for a very short period of time, it is only happening because TGIF has been successful and the price of their stock has risen. As the warrant exercises bring in cash for the company and the forced conversion of the debentures saves the company the interest payments, it provides funding for future growth. Then existing shareholders will be rewarded when future growth is reflected in a higher share price.
Warrants such as these are most often issued as a “sweetener” when a company issues shares to raise money. Assume you purchased 10,000 shares of a company on a new issue and your received 10,000 warrants exercisable at $.25 per share to purchase 10,000 shares more shares. Assume the shares are trading at $.50 per share. To exercise the warrants you have to turn in your 10,000 warrants plus $.25 per warrant or $2,500. This is something you want to do because the 10,000 shares you acquire for $2,500 by exercising the warrants are worth $5,000.
Some warrant holders may not have the $2,500 needed to acquire the shares. In that case, you can sell 5,000 of the 10,000 shares you purchased originally at $.50 per share raising the $2,500 you need to exercise to acquire 10,000 more shares. After you do this, you end up with 15,000 shares worth $7,500 at $.50 per share.
Because some warrant holders have to sell, the price of the shares often declines while this is taking place. But that selling is artificial, that is, the sellers don’t necessarily want to sell but some investors have to because they don’t have the money they need to exercise. This means there is a buying opportunity for the rest of the market if the selling depresses the stock price in the short term.
According the information provided, there are some warrants expiring on March 22, 2019 and the rest will expire on April 4, 2019. I will be watching for a wonderful short term buying opportunity in TGIF between now and April 4, 2019. Stay tuned!