Ethernity Networks Share Discussion Threads

[purchaseatthetop] 23/6/2024 10:22

“The second part is incorrect because again it ignores the value of the sold subscription shares at 3p already netting Bergen £1.2m before they've even started exercising the warrants.”

This is utterly irrelevant because the RNS says they are valued at the VWAP exercise price, not what they may have been sold for. They are not for free. They are at the VWAP value.

But we are going round snd round here. At least we agree there is no problem if the VWAP is 1p or above. I am looking worst case at below 1p.

[pwhite73] 23/6/2024 09:58

Patt - "£800k less (40m * 3p) which is negative £400k do cannot convert any.
That is a lovely thought. Only 40m subscription shares and no warrsnts."

The first part is correct.

patt - "If the VWAP is 1.5p then £800k less (40m *1.5p) which is £200k of shares which is 20m warrant shares to add to the 40m subscription shares."

The second part is incorrect because again it ignores the value of the sold subscription shares at 3p already netting Bergen £1.2m before they've even started exercising the warrants.

The whole purpose of the 40m subscription shares was that they make the contingent £800k warrants obsolete on contract news.

If ENET have borrowed £800k from Bergen why give them 40m shares then allow them to exercise £800k of warrants. If that were the case the 40m shares are effectively for free.

Speak Later.

[daddy warbucks] 23/6/2024 09:56

Thanks. I do get mixed up with the terminology. Right that’s my last post till later.

[purchaseatthetop] 23/6/2024 09:55

DaddyW. No. The price of the value of the subscription shares is the relevant exercise price which is the relevant VWAP less 15%.

“New Tech will be entitled to exercise the Warrant only for an amount exceeding the difference between the maximum amount of £800,000 (or a lower amount outstanding at the time following prior exercise of the Warrant) and the value of 40,000,000 Subscription Shares at the relevant exercise price.”

[pwhite73] 23/6/2024 09:52

DW - "The 40 million subscription shares are valued at 1p for the 45 days"

Even that's wrong. It's the warrants that have a value of 1p for the first 45 days. The subscription shares are valued at the current market price.

RNS 17/05/24 - "The Warrant is initially exercisable at a price of 1 pence per Ordinary Share for a period of 45 days"

[purchaseatthetop] 23/6/2024 09:52

PWhite. If the VWAP is 3p then they can convert….

£800k less (40m * 3p) which is negative £400k do cannot convert any.
That is a lovely thought. Only 40m subscription shares and no warrsnts.

If the VWAP is 1.5p then £800k less (40m *1.5p) which is £200k of shares which is 20m warrant shares to add to the 40m subscription shares.

My “incorrect interpretation”; as you call it “only works if the exercise price is under 1p”. Which means it is completely valid and correct. My fear is sub 1p because then the share numbers grow rapidly.

[daddy warbucks] 23/6/2024 09:46

Patt. Just read 6our last post and I think you may be wrong.

The 40 million subscription shares are valued at 1p for the 45 days and after that at whatever price the two parties agree on.

The other shares are based on the formula, the verge of the lowest 5 days VWAP, less 15% in the 20 working days before the notice to subscribe for an allocation.

[daddy warbucks] 23/6/2024 09:39

I think you have both contributed to a great thread and got some of us thinking. thank you both.

I am going out shortly to play in my local crown green club competition, so don’t have the opportunity at the moment to discuss further, but I will leave one further question for you all.

What is the relevance of the 45 day period mentioned in the pricing of the subscription shares?
I have both positive and negative views on this. Help someone lol!

[pwhite73] 23/6/2024 09:39

How much of the warrants can Bergen exercise on 07/07/2024 if they sell the subscription shares on Monday at 3p after Tarana contract news and the subscription shares are still valued at 3p on 07/07/2024?

As I said to you before your incorrect interpretation only works if the exercise price is under 1p.

[purchaseatthetop] 23/6/2024 09:36

PW. The 40m subscription shares are not for free.

The loan is £800k.
If the VWAP is 0.8p at exercise day then the 40m subscription shares are valued at £320k.
That leaves a maximum of £480k that can be converted at 0.8p.
It’s that simple.

[pwhite73] 23/6/2024 09:32

Thank you DW. Indeed right at the start of the RNS they tell you the subscription shares are part of the funding package. Patt simply misunderstands the package if he thinks the subscription shares can be sold off and Bergen can still recover their £800k via the exercise of the warrants. If that were the case then the 40m subscriptions has been handed to Bergen for free.

"In consideration of the gross Fundraise proceeds, New Tech has been granted a contingent warrant exercisable over new ordinary shares of ILS 0.001 each ("Ordinary Shares") as described below (the "Warrant"), and at Closing, the Company will issue 40,000,000 new Ordinary Shares (the "Subscription Shares") to New Tech."

The contingent warrants are only exercisable in the event Bergen does recover its £800k from the sale of the 40m subscription shares over the cause of eight months. If ENET announce Tarana contract news and the subscription shares have a value of 3p netting Bergen £1.2m then they cannot exercise a single warrants.

[purchaseatthetop] 23/6/2024 09:17

Daddywarbucks. The point is that Bergen don’t have to report to Ethernity of what they actually sold the shares at and when. That would never happen.

The point is that the 40m subscription shares are always valued as if being sold at the moment of any conversion at the VWAP price. Whether Bergen have sold any before or at what price is utterly irrelevant to the calculation. The RNS says exactly what the mechanics are.

PW can believe what he wants. Actually it makes no difference and I hope he is right. But he isn’t because the RNS says so. But it is a fun debate while we wait. The more detailed analysis of RNSs the better in my view.

[daddy warbucks] 23/6/2024 09:10

I would like to think that these boards are here for discussion, rather than for points scoring.
I am enjoying the debate on this latest loan, as both PWhite and Patt have made me stop being lazy and made me look at this complex set of rules.
The subscription shares on the face of it are intrinsically linked to any further allocation request under the scheme, so I think PWhite is correct. If you sell the 40 million subscription shares, what can they base any future allocation on.
If those shares are sold for more than 2p then Bergen have got their money back.anything less then they could shoot themselves in the foot.
The fact that Bergen don’t appear to have sold any, seems to justify the probability that they are needed to calculate any further allocations.
I am hopeful that this loan will be repaid to the satisfaction of both Bergen and shareholders and am keeping my fingers crossed that news will arrive shortly that will help to achieve that.
Nothing is certain, (especially on AIM), but with risk, could come nice rewards.
People need to make up their own minds and be prepared to lose the lot, if contracts don’t appear. Good luck everyone. An interesting week ahead I think.

[purchaseatthetop] 23/6/2024 09:02

“The amount available to be exercised under the Warrant is £800,000, less the value of the 40,000,000 Subscription Shares, calculated by reference to the relevant exercise price, such that New Tech will be entitled to exercise the Warrant only for an amount exceeding the difference between the maximum amount of £800,000 (or a lower amount outstanding at the time following prior exercise of the Warrant) and the value of 40,000,000 Subscription Shares at the relevant exercise price.”

It doesn’t matter if they are sold or not. The conversion calculation is always the original 40m shares at the relevant exercise price. Never less than 40m. You really don’t get it do you? It’s funny to see you flounder on the mechanics.

[pwhite73] 23/6/2024 08:37

If all the subscription shares are sold tomorrow then Bergen has no subscription shares on 07/07/2024 to base any warrant conversion calculations on!!!

[purchaseatthetop] 23/6/2024 08:30

The value of the subscription shares is completely unrelated to whatever Bergen actually sell them at or when.

The RNS says that the subscription shares value for warrant conversion calculation is the exercise price VWAP less 15% discount. It is totally clear to me at least!

It does not need interpretation. It is what the RNS says.

[pwhite73] 23/6/2024 08:17

Realdealy - "They should bring back Bruce Forsyths ' higher / lower' card game , I think they subscription shares are based on that idea."

Again that's correct. How much of the £800k warrants can be exercised is correlated to the price of the subscription shares. If the subscription shares are valued at 1p then only £400k of the warrants can be exercised. If the subscription shares are valued at 2p then no warrants can be exercised as the value of the subscription shares would be £800k which is the loan amount.

Bergen cannot exercise £800k of warrants independent of the value of the subscription shares whether sold or still held the RNS says so.

"The amount available to be exercised under the Warrant is £800,000, less the value of the 40,000,000 Subscription Shares".

Now it's about time you and DaddyWarbuck have the courage to tell Postman Patt he is wrong from your own interpretations of the RNS.

[realdealy] 23/6/2024 08:08

They should bring back Bruce Forsyths ' higher / lower' card game , I think they subscription shares are based on that idea. A fourth viewpoint.

[papillon] 22/6/2024 23:25

I've sent you a couple of PM's, countbasie1.

[purchaseatthetop] 22/6/2024 23:04

Back from a fabulous 60th party near Umbertide. Brilliant fun.

If the exercise price is 1.1p then they can convert £800k less (40m *1.1p) which is £360k of shares. So about 33m shares. The remaining £440k is up to Bergen depending on when they sell them for more or less than 1.1p. This is exactly what the RNS says.

The subscription shares are always worth only what the newest exercise price is. The total of 40m subscription shares plus the ability to convert at the exercise price is always £800k if Bergen can convert some balance of the loan at the exercise price.

[pwhite73] 22/6/2024 22:31

DW - "With the 40 million already issued and an additional 40 million maximum that can be allocated, then I feel the £800,000 would be recouped by the lender."

Bravo!!!...100% correct. We are both singing from the same hymn sheet. With 40 million subscription shares and a maximum of another 40 million additional shares if the share price is over 1p Bergen get their £800k back in full.

What Postman Patt is arguing is that the subscription shares are irrelevant in this matter. He thinks if the subscription shares are sold on Monday Bergen can still exercise the £800k warrants. But they can't if the exercise price is 1.1p for the maximum amount of shares that can be issued in this scenario is only another 40 million that amounts to £440k. So where is the remainder £360k coming from?.

Where its coming from is the 40 million subscription shares already sold or still held at 1.1p.

[daddy warbucks] 22/6/2024 22:10

Thanks, but I am as confused as everyone else. I think we will have to see how it plays out.I'm willing to take the chance and will hold. I can understand if others are more cautious and want to sell.If I had more spare cash, I would probably buy a few more.

[countbasie1] 22/6/2024 21:44

DaddyThanks for bringing some light and sense to the doom loop which is the two big super Ps

[daddy warbucks] 22/6/2024 21:40

PWhite. Thank you for the reply.I appreciate what you say, but I feel that the relevant rns states an additional 40 million can be allocated if the share price is above 1pWith the 40 million already issued and an additional 40 million maximum that can be allocated, then I feel the £800,000 would be recouped by the lender.Three of us have different views lol. I just wish they would write these news items in a clear way.

[pwhite73] 22/6/2024 19:12

DW - "Patt, it says it gets reset after 45 days, so if no shares are requested"

Part of the agreement is that the exercise price will reset after 45 days from closing date. This is not dependent on any request from Bergen.

RNS 17/05/2024 - "The Warrant is initially exercisable at a price of 1 pence per Ordinary Share for a period of 45 days from Closing. The exercise price will be reset on the 45th day after Closing,"

This is to protect the shareholders from massive dilution. If a Tarana contract lands next week and the share price returns to its highs of 60p ENET will not allow Bergen to exercise at 1p. On the other side of the coin if ENET announces Tarana have terminated the relationship and the share price slumps to 0.05p Bergen will lose money if they exercise at 1p. The reset is to protect both sides.