Globus Maritime Ltd (NASDAQ:GLBS)
Many analysts revised their stock ratings on Globus Maritime Ltd (NASDAQ:GLBS) after a shocking, DryShips-inspired recapitalization agreement diluted external shareholders by over 90%. The company released 5 million new shares to as many as 4 investors for total gross proceeds of $5 million. The placement price essentially calculates to merely $1 per share.
Moreover, the company released warrants to buy an additional 25 million shares at $1.60 per share. In order to erase $20 million in credit obligations, the company issued an additional 20 million shares to firms controlled by the Globus’s chairman – the debt conversion price was $1.
The chairman’s entities received warrants to buy another 7.4 million shares for $1.60 per share. As a result, the new share count comes to 27.6 million, an immediate dilution of 90% for external shareholders. Even worse, the equity count should soon surge to 60 million considering the low warrant exercise rate of $1.60 and, importantly, the warrants are instantly exercisable. Final dilution would compute to 95.5%.
After the exercising of warrants and the debt conversion, Globus Maritime will have almost $57 million in cash and $45 million in total debt for a cash balance of almost $12 million, add roughly $50 million in fleet market value and the firm’s net asset worth post recapitalization comes to just $1 per share.
At a share price of $7, the firm ‘s market cap comes in around $17 million. Not bad for a deal that initially reduced the firm’s net debt by a mere $25 million and only gets the net asset value to above zero from negative territory.
Analysts initially considered that the additional shares can hit the market almost immediately, however the fact is these shares have yet to be registered with the U.S. SEC and looking at the contract terms, the new shareholders will have to wait at least 6 months before their allowed rights to demand registration turns exercisable.
It indicates, the firm’s registered share count of 2.6 million will likely remain unchanged for next 6 months with the free float considered to be even lower with the chairman being the firm’s controlling shareholder.
Considering these issues, analysts revised their recommendation. Globus Maritime Ltd (NASDAQ:GLBS) stock was a huge mover yesterday! The stock surged over 56% or almost $2.40 during the last trading session, closing at $6.74. About 3.72 million shares traded or over 1203% up from the average. The stock has gained 63.64% since last August 2016 and is in up trend.
|Last Price a/o 3:21 PM EST||$6.74|
|Market Cap (mlns)||$19.34M|
|Shares Outstanding (mlns)||2.87M|
|Share Float (mlns)||2.37M|
|Short Interest Ratio||0.24|
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.
About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.