ERI postpones warrant conversion yet again
Environmental Resources Investment PLC (ERI) again has decided to delay the conversion of its warrants into shares, quite similarly what it did in May 2011.
On Friday, the company informed the Colombo Stock Exchange that its board of directors at a meeting held on January 5, 2012, had unanimously resolved to extend the cutoff date of 2012 warrants from February 3, 2012 to September 6, 2013.
It further recommended extending the expiration date of the warrants from February 24, 2012 to September 26, 2013.
ERI said the board of the company was “of the view that it would be in the best interests of the company if the 2012 warrants were fully exercised.” ERI is also scheduled to convene an Extraordinary General Meeting of the shareholders and a meeting of the warrant holders for February 1, 2012 to consider and if thought fit to pass the requisite special resolutions for the aforesaid variation. The company further went on to state that if the aforesaid special resolutions were passed by the shareholders and the holders of 2012 warrants, the said 2012 warrants will trade in the CSE up to and including September 6, 2013.
Furthermore, the holders of the 2012 warrants in the register of 2012 warrant holders as at end of trading on September 6, 2013, who wish to exercise their warrants are permitted to do so from September 7, 2013 up to September 26, 2013.
Market analysts Mirror Business talked to were on the opinion that the decision to postpone the warrant conversion has been caused by the poor performance of ERI share in the market.
The 2011 warrants of ERI that were converted will be traded on the Colombo bourse today. The warrants were converted to shares at Rs.24. The current market price of ERI share is at Rs.33. The 2012 warrants if not postponed would have been converted in February 2012 at the price of Rs.33, analysts pointed out.
In June last year, ERI delayed the conversion of 2011 warrants, by up to six months that were to be converted to shares.
ERI Director Kosala Heengama was then quoted as saying, at the time that the decision to extend the conversion date was due to “adverse market conditions”.
A warrant is a financial instrument issued with a fixed exercise price at which it will be converted to shares in a future expiry date. In practice, warrants are issued to raise finance and support the growth plans and/or satisfy operational cash needs of a given company. This is linked to the main strategic plan of the organisation.