"The Warrant Exchange Offer would close prior to the record date for PSTH’s distribution of UMG shares such that warrantholders who participate in the exchange offer and continue to hold their PSTH shares will receive UMG Shares in the Distribution."
So if you do the cashless redemption of existing outstanding warrants, you'll get PSTH sh…
"The Warrant Exchange Offer would close prior to the record date for PSTH’s distribution of UMG shares such that warrantholders who participate in the exchange offer and continue to hold their PSTH shares will receive UMG Shares in the Distribution."
So if you do the cashless redemption of existing outstanding warrants, you'll get PSTH shares in time to be entitled to both UMG and Remainco. PSTH is a year old and the 48 mo/$22 cell in the redemption table in the S1 is 0.2433. At $22/share, that makes a warrant worth $5.35.
Also
"One SPAR will be distributed for each share of PSTH Class A common stock outstanding on the record date shortly following the completion of the Redemption Tender Offer and Warrant Exchange Offer."
and
"PSTH will distribute Distributable Tontine Redeemable Warrants to remaining shareholders after completion of the Redemption Tender Offer and Warrant Exchange Offer. PSTH will make that distribution to shareholders of record after completion of the Redemption Tender Offer, but before completion of the Warrant Exchange Offer. This means that shares that are redeemed in the Redemption Tender Offer or that are issued in the Warrant Exchange Offer will not receive the Distributable Tontine Redeemable Warrants."
So ordering is:
1. Share Redemption Tender Offer ($20 refund)
2. Tontine Record Date
3. Outstanding Warrant Redemption
4. Distribution of Tontine Warrants
5. Distribution of UMG shares???
6. Distribution of SPARs???
I have ??? on #5 and #6 because it states clearly that they happen after #3 (I led off with the proof of that above), but I haven't found clarity on whether they happen after #4. If so, it is conceivable you'd get the tontine warrants in time to exercise them for shares and then get more UMG, more Remainco, and more SPARs.
If 5/6 really do happen after 4, then the tontine warrants could end up offering leverage into UMG/Remainco/SPARs. Like, if half the shares redeem, then remaining shares get 4/9 of a tontine warrant. 4/9 * 0.2433 = 0.1081 PSTH shares. So 1 share pre-redemption would be worth 1.1081 shares post, in time for UMG distribution. That means 1 share has about $22 of UMG/Remainco value in that scenario. At the current price, you get the 1.1081 SPARs for free. Of course, who knows if anyone will redeem their shares for $20 at this point.
Also, the SPARC structure sounds really elegant, if it works out. Bill gets unlimited time to hunt, nobody is buying options or complaining about opportunity cost, and PSH owns all the equity so has full voting control over an eventual deal.
"No assurance can be given that SPARC will be ultimately effectuated on the above outlined terms or at all."
Sounds like SEC and NYSE still need to bless the SPARC idea.
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I do wonder how PSTH options are going to be adjusted for this. I'm guessing they miss on all the fun and just get a strike adjustment on Remainco. I hope that's not true, because I definitely had some Jan 22 $20C in the mix that got cut in half today.
One question on the warrant exchange offer: I read the prospectus as saying that the warrants have a five year expiration that starts after the "initial business combination". So should your 48 months number really be 60 as they have not done the initial business combination yet? Theoretically, the warrants would still have a 5 year life? I know that would not change the ratio much, just wanted to see if I was reading the prospectus right!
I think the tontine warrants have five years from the business combination (because you don't get them until the combination occurs). The redeemable warrants (the ones trading now) expire five years from the IPO, which was one year ago.
I don’t think we know. All we know right now is Vivendi has a shareholder vote on 6/22 to approve the deal and the spin of UMG. If that passes, they plan to list “sometime in Q3” and PSTH holders won’t get UMG until after that.
But, you options should be adjusted to entitle you to the basket of securities if all at happens before they expire.
The OCC will issue a ruling on how the options will be adjusted. Last I saw, someone called and they are "working on it". It likely won't get issued before the 6/22 vote and official DA, though. You can keep an eye on the "information memos" on theocc.com and find the rulings.
Great question on options. Note that the Euronext exchange does have options and 1 call = 100 shares. Therefore, it seems to me, PSTH option holders should get adjusted options on the Euronext exchange.
Spent some time reading about how options contracts are adjusted by corporate events. It seems that in the event of a stock/asset distribution (spin-off, etc), the contract is modified to include the distributed assets. So I guess calls on PSTH will now entitle you to 100 shares of Remainco, X shares of UMG (X = 1475/UMG share price that PSTH pays), and 100 SPARs. The intrinsic of the option would be the sum-of-parts of those things.
That could be pretty great, especially for LEAPs. Also maybe an arbitrage opportunity to keep an eye on if the adjusted options trade wildly out of sync with the three underlying securities. Guessing the market is going to be thin on them though... a lot of retail apps won't even let people buy adjusted options.
"The Warrant Exchange Offer would close prior to the record date for PSTH’s distribution of UMG shares such that warrantholders who participate in the exchange offer and continue to hold their PSTH shares will receive UMG Shares in the Distribution."
So if you do the cashless redemption of existing outstanding warrants, you'll get PSTH shares in time to be entitled to both UMG and Remainco. PSTH is a year old and the 48 mo/$22 cell in the redemption table in the S1 is 0.2433. At $22/share, that makes a warrant worth $5.35.
Also
"One SPAR will be distributed for each share of PSTH Class A common stock outstanding on the record date shortly following the completion of the Redemption Tender Offer and Warrant Exchange Offer."
and
"PSTH will distribute Distributable Tontine Redeemable Warrants to remaining shareholders after completion of the Redemption Tender Offer and Warrant Exchange Offer. PSTH will make that distribution to shareholders of record after completion of the Redemption Tender Offer, but before completion of the Warrant Exchange Offer. This means that shares that are redeemed in the Redemption Tender Offer or that are issued in the Warrant Exchange Offer will not receive the Distributable Tontine Redeemable Warrants."
So ordering is:
1. Share Redemption Tender Offer ($20 refund)
2. Tontine Record Date
3. Outstanding Warrant Redemption
4. Distribution of Tontine Warrants
5. Distribution of UMG shares???
6. Distribution of SPARs???
I have ??? on #5 and #6 because it states clearly that they happen after #3 (I led off with the proof of that above), but I haven't found clarity on whether they happen after #4. If so, it is conceivable you'd get the tontine warrants in time to exercise them for shares and then get more UMG, more Remainco, and more SPARs.
If 5/6 really do happen after 4, then the tontine warrants could end up offering leverage into UMG/Remainco/SPARs. Like, if half the shares redeem, then remaining shares get 4/9 of a tontine warrant. 4/9 * 0.2433 = 0.1081 PSTH shares. So 1 share pre-redemption would be worth 1.1081 shares post, in time for UMG distribution. That means 1 share has about $22 of UMG/Remainco value in that scenario. At the current price, you get the 1.1081 SPARs for free. Of course, who knows if anyone will redeem their shares for $20 at this point.
Also, the SPARC structure sounds really elegant, if it works out. Bill gets unlimited time to hunt, nobody is buying options or complaining about opportunity cost, and PSH owns all the equity so has full voting control over an eventual deal.
"No assurance can be given that SPARC will be ultimately effectuated on the above outlined terms or at all."
Sounds like SEC and NYSE still need to bless the SPARC idea.
---
I do wonder how PSTH options are going to be adjusted for this. I'm guessing they miss on all the fun and just get a strike adjustment on Remainco. I hope that's not true, because I definitely had some Jan 22 $20C in the mix that got cut in half today.
As an aside, wow did the warrant holders get absolutely butchered by this deal.
One question on the warrant exchange offer: I read the prospectus as saying that the warrants have a five year expiration that starts after the "initial business combination". So should your 48 months number really be 60 as they have not done the initial business combination yet? Theoretically, the warrants would still have a 5 year life? I know that would not change the ratio much, just wanted to see if I was reading the prospectus right!
I think the tontine warrants have five years from the business combination (because you don't get them until the combination occurs). The redeemable warrants (the ones trading now) expire five years from the IPO, which was one year ago.
When are the dates for this to happen. I have September $20 calls, that fell massively on Friday due to both the stock price falling and IV crush...
Do I take the loss or exercise them early? Like what are the dates to earn the UMG spin-off and SPARC issue?
@Andrew or anyone please advise
I don’t think we know. All we know right now is Vivendi has a shareholder vote on 6/22 to approve the deal and the spin of UMG. If that passes, they plan to list “sometime in Q3” and PSTH holders won’t get UMG until after that.
But, you options should be adjusted to entitle you to the basket of securities if all at happens before they expire.
Thanks, Would The adjusted options would not give me the sparc or spin off shares? Or options in UMG?
I guess I'm trying to figure out if its worth selling the options at a loss.
And then just buying PSTH instead.
Or exercising the options.
Any idea?
The OCC will issue a ruling on how the options will be adjusted. Last I saw, someone called and they are "working on it". It likely won't get issued before the 6/22 vote and official DA, though. You can keep an eye on the "information memos" on theocc.com and find the rulings.
Great question on options. Note that the Euronext exchange does have options and 1 call = 100 shares. Therefore, it seems to me, PSTH option holders should get adjusted options on the Euronext exchange.
Spent some time reading about how options contracts are adjusted by corporate events. It seems that in the event of a stock/asset distribution (spin-off, etc), the contract is modified to include the distributed assets. So I guess calls on PSTH will now entitle you to 100 shares of Remainco, X shares of UMG (X = 1475/UMG share price that PSTH pays), and 100 SPARs. The intrinsic of the option would be the sum-of-parts of those things.
That could be pretty great, especially for LEAPs. Also maybe an arbitrage opportunity to keep an eye on if the adjusted options trade wildly out of sync with the three underlying securities. Guessing the market is going to be thin on them though... a lot of retail apps won't even let people buy adjusted options.