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TOPIC: Ownership, warrants and cash

Ownership, warrants and cash 06 Mar 2015 14:16 #3673

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I have read a lot of "bull" on Sabby, ownership, warrants etc relating to the October 8 financing, which was necessary after Oxford Finance put the knife on Cytori´s throat to deliver 13,5 Mio of financing within a month. :bang:

I tried to ignore my "old burn-out" on financial matters (as a former financial manager) and dedicated a half hour on the issue to see if I could get any smarter.. :KO:

I think I am.. :whistle:

On October 8 2014 Cytori announced the Roth financing and as part of that announcement said:

The investors also will receive warrants to purchase an aggregate of 25,961,540 shares of Cytori’s common stock. The warrants will have an exercise price of $0.5771 per share, will be exercisable six months after the date of issuance and will expire five years from the initial exercise date. The convertible preferred stock and the warrants are immediately separable and will be issued separately


So- those warrants could NOT have been converted as of yet. First possibility would be April 8 2015 i.e. 6 months after issuance. :bash:

The 8K issued on that day had a very interesting clause:

Pursuant to the terms of the Certificate of Designation and the Warrants, the number of Conversion Shares and Warrant Shares that may be acquired by any holder upon any conversion of the Preferred Stock or exercise of the Warrants will be limited to the extent necessary to ensure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the holder’s for purposes of Section 13(d) of the Exchange Act does not exceed 9.99% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). The holder may elect to decrease and subsequently increase this beneficial ownership limitation to any other percentage, but not in excess of 9.99% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise), provided that any such increase will not be effective until 61 days after such written notice is delivered. If, at the time of exercise, there is no effective registration statement registering the issuance to the holder of the shares of Common Stock underlying the Warrant, the holder may exercise, in whole or in part, the warrant on a cashless basis. When exercised on a cashless basis, a portion of the warrant is cancelled in payment of the purchase price payable in respect of the number of shares of Common Stock purchasable upon such exercise. The Warrants also provide for certain adjustments to the exercise price of the Item 1.01. Entry into a Material Definitive Agreement. Warrants based on stock dividends, stock splits and certain dilutive issuances and certain adverse FDA decisions.


This means a couple of things:

first- the warrants will be registered. Normally that means they will become tradable.

second- no participant in the secondary can own at any time more than 9,99% of the OS shares of Cytori. That is why Sabby was reducing the shares already held as of December 31 2014 and probably continued selling, since in aggregate (after receiving shared from conversion of preferred to common) they still had to stay under that quorum.

I think the incredible volume increase in shares traded last week , had everything to do with "Big Money" waiting to pick up the shares of the October secondary and we are finally on our way to oblivia... :grin:

:bye:

Enjoy the ride. :nice:
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Ownership, warrants and cash 06 Mar 2015 15:29 #3674

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I agree.....F

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Ownership, warrants and cash 06 Mar 2015 15:53 #3675

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Nothing new to me here Fas but I am disagreeing on how you are reading the registering of warrants. I read it is they simply must be registered for sale on the open market. In other words they are registered, then they can be exercised and sold on the open market as common shares otherwise the cashless option will be used. The last trading warrants (CYTXW) was specifically spelled out that they would trade independently and given the CYTXW ticker within the 8k release.

I guess we will see unless you have more specific information on why I would be wrong.

For clarification I am talking the $0.5771 warrant.

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Ownership, warrants and cash 07 Mar 2015 05:46 #3676

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The last trading warrants (CYTXW) was specifically spelled out that they would trade independently and given the CYTXW ticker within the 8k release.


Hedge- The main conditions are registration and obviously a contractual commitment to that effect. But you seem to be right- that commitment is not made, to list the warrants. I just glanced over the thing and noted the transferability section. Nothing on exchanges- so yes, the warrant will not be listed.

Transferability . Subject to compliance with any applicable securities laws and the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.


Anyway- thats maybe not all that relevant anyway-

THE EYE OPENER after reading the summary a bit was the 9,99% ownership thing.

Explains maybe why KT Lim could not participate and means that funds like Sabby will be dumping a lot of shares on the market. And big question of course- when do they convert the warrants.

If I would be Sabby- I would wait 4-5 years at least watch Cytori develop and grow.... :yep:
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Ownership, warrants and cash 07 Mar 2015 06:25 #3677

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Re-visiting the 13 G/A of Sabby, in which the presumably 100% owned subs by Sabby Management i.e. the Sabby Healthcare fund and Sabby Volatility Warrant master Fund own in aggregate 16.9 Mio shares being 17.71% of OS Cytori shares.

Hal Mintz however reports 9,99% voting rights, which is the maximum.

The way I read this now means, that those funds have 61 days time to dispose of minimum 7.72% of Cytori OS shares to be compliant with the contract.

And obviously- before they can convert warrants in the future- they have to dispose of some of the holdings too.... :grin:

Interesting- anybody have different views on this?? It seems quite complex. :KO:
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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:

Ownership, warrants and cash 07 Mar 2015 11:30 #3678

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fas wrote: Re-visiting the 13 G/A of Sabby, in which the presumably 100% owned subs by Sabby Management i.e. the Sabby Healthcare fund and Sabby Volatility Warrant master Fund own in aggregate 16.9 Mio shares being 17.71% of OS Cytori shares.

Hal Mintz however reports 9,99% voting rights, which is the maximum.

The way I read this now means, that those funds have 61 days time to dispose of minimum 7.72% of Cytori OS shares to be compliant with the contract.

And obviously- before they can convert warrants in the future- they have to dispose of some of the holdings too.... :grin:

Interesting- anybody have different views on this?? It seems quite complex. :KO:


Ok, I think you are right in that they can hold those extra shares for 61 days, if they actually have them. But, the wording is really, really tricky.

Another point: if Sabby hypothetically converts their convertibles and any re-priced warrants they had beforehand and has 9.99%, there is nothing stopping them from buying more on the open market.
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Ownership, warrants and cash 07 Mar 2015 13:13 #3679

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Another point: if Sabby hypothetically converts their convertibles and any re-priced warrants they had beforehand and has 9.99%, there is nothing stopping them from buying more on the open market.


You probably are right there too- I think the "control points" are likely to be the quarterly SEC filings by the funds of their holdings.
I do not think you fool around with the SEC all that much and there will be some auditing or certification requirements on the reporting. :whistle:

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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:
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