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Good evening, we hold shares in Creso Pharma and have been offered to by a option to by a rights issue at the value of .05 each and exercised at a price of .80 in 2 years. I do not fully understand how a this works, can you please explain. Regards, Marina & Michael
A: The offer closes tomorrow (14 August) at 5.00pm (WST).
It is a non-renounceable entitlement to purchase options in the company (Creso Pharma – ASX:CPH) . It is raising about $2.8m for working capital by issuing approx. 58 million options on the basis of 1 option for every 2 shares.
You will pay a premium of $0.05 per option (up front).
At any time in the next two years (up to 21/2020), you can elect to exercise the options and convert them into ordinary shares by paying a strike price of 80c per ordinary share. Obviously, you will only exercise if CPH is successful with its business endeavours and the share price goes a lot higher. If you never exercise, the options lapse and you lose your 5c.
