財(cái)務(wù)管理：理論與實(shí)踐21show-在線瀏覽
2024-07-25 23:56本頁(yè)面
【正文】 is $100 more than the selling price. If after issue the warrants immediately sell for $5 each, what would this imply about the value of the package? (More...) 21 12 Copyright 169。 20xx Harcourt, Inc. All rights reserved. ?Generally, a warrant will sell in the open market at a premium above its value if exercised (it can’t sell for less). ?Therefore, warrants tend not to be exercised until just before expiration. Assume that the warrants expire 10 years after issue. When would you expect them to be exercised? (More...) 21 14 Copyright 169。 20xx Harcourt, Inc. All rights reserved. ?When exercised, each warrant will bring in the exercise price, $25. ?This is equity capital and holders will receive one share of mon stock per warrant. ?The exercise price is typically set some 20% to 30% above the current stock price when the warrants are issued. Will the warrants bring in additional capital when exercised? 21 16 Copyright 169。 20xx Harcourt, Inc. All rights reserved. ?The pany will exchange stock worth $ for one warrant plus $25. The opportunity cost to the pany is $ $ = $ per warrant. ?Bond has 50 warrants, so the opportunity cost per bond = 50($) = $. What is the expected return to the bond withwarrant holders (and cost to the issuer) if the warrants are expected to be exercised in 5 years when P = $? (More...) 21 18 Copyright 169。 20xx Harcourt, Inc. All rights reserved. ?The cost of the bond with warrants package is higher than the 12% cost of straight debt because part of the expected return is from capital gains, which are riskier than interest ine. ?The cost is lower than the cost of equity because part of the return is fixed by contract. (More...) 21 20 Copyright 169。 20xx Harcourt, Inc. All rights reserved. ?At the time of exercise, either more or less wealth than expected may be transferred from the existing shareholders to the warrant holders, depending upon the stock price. ?At the time of issue, on a riskadjusted basis, the expected cost of a bondwithwarrants issue is the same as the cost of a straightdebt issue. 21 22 Copyright 169。 straight debt issue would require a 12% coupon. ?Call protection = 5 years and call price = $1,100. Call the bonds when conversion value $1,200, but the call must occur on the issue date anniversary. ?P0 = $20。 g = 8%. ?Conversion ratio = CR = 40 shares. Assume the following convertible bond data: 21 23 Copyright 169。 20xx Harcourt, Inc. All rights reserved. Examples of real convertible bonds issued by Inter panies Issuer CNET DoubleClick Mindspring NetBank PSINet Size of issue $1,250 mil 55 mil 173 mil 250 mil 180 mil 100 mil 400 mil 150 mil Cvt Price $ 165 Price at issue $122 16 84 134 60 32 55 52 21 25 Copyright 169。 20xx Harcourt, Inc. All rights reserved. ?Because the convertibles will sell for $1,000, the implied value of the convertibility feature is $1,000 $ = $. ?The convertibility value corresponds to the warrant value in the previous example. Implied Convertibility Value 21 27 Copyright 169。 20
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