{"id":19129,"date":"2012-07-05T19:18:44","date_gmt":"2012-07-05T23:18:44","guid":{"rendered":"http:\/\/www.prefblog.com\/?p=19129"},"modified":"2012-07-05T19:18:44","modified_gmt":"2012-07-05T23:18:44","slug":"lfe-pr-b-explanation-of-diluted-nav","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=19129","title":{"rendered":"LFE.PR.B: Explanation of Diluted NAV"},"content":{"rendered":"

There’s something new going on with LFE.PR.B … this is the fact that the reported NAV per Unit<\/a> as of 2012-6-29 of 11.83 carries the note:<\/p>\n

Diluted NAV (assuming full exercise of 2013 warrants)<\/p><\/blockquote>\n

Huh? How come they’re reporting a Diluted NAV when the 2013 warrants have an exercise price of 12.00<\/a>? I eMailed the company:<\/p>\n

I see that you are reporting (http:\/\/www.lifesplit.com\/valuations.html) a “Diluted NAV (assuming full exercise of 2013 warrants)” of 11.83 for 2012-6-29, although the exercise price of these warrants is 12.00 (http:\/\/www.lifesplit.com\/pdf\/LFE%20Jun%2025.12-Warrant%20Pricing.pdf).<\/p>\n

i) what is the undiluted NAV?<\/p>\n

ii) why did you decide to report an NAV assuming full exercise of the 2013 warrants when these warrants are currently out of the money?<\/p><\/blockquote>\n

… and they replied … <\/p>\n

We are required to post a diluted NAV when the net asset value is above the 2013 warrant net-commission exercise price of $11.75 ($12 less 25 cents commission).<\/p>\n

The undiluted NAV is $11.91.<\/p><\/blockquote>\n

Yes indeed, I find when I look at the information circular<\/a>:<\/p>\n

The Company will pay a subscription fee of $0.25 per Unit in respect of each subscription procured by a CDS Participant on behalf of their clients.<\/p><\/blockquote>\n

So yes, the warrants are out-of-the-money relative to NAV as far as the clients are concerned; but dilutive to the company as far as its net proceeds are concerned.<\/p>\n

It is interesting to note that today:<\/p>\n