Bioceres Crop Solutions (BIOX) – Warrant Exchange – 21% Upside

Current Price: $0.50

Offer Price: $0.605

Upside: 21%

Expiration Date: 24th of August 2020

Offer document

 

This is a short note as the situation might be available only for a limited amount of time.

Bioceres Crop Solutions intends to eliminate all of its outstanding warrants (24.2m) and on the 27th of July has made an offer to exchange them into either $0.45/share in cash or 0.12 BIOX shares. At the current prices, share consideration offers 21% upside. Last time I chekced some borrow for hedging was still available on IB (with a 35% annual fee, which will decrease the upside by 2%). The expiration date is set for the 24th of August.

There seem to be no minimum selection requirements on either the cash or stock, so investors will receive the full consideration amount in the form that was chosen (no proration for cash/stock).

Minimum acceptance condition stands at 50% (12.1m) and is guaranteed to be satisfied as certain warrant holders that own 11.6m combined have already agreed to tender.

Offer is not conditioned on financing, while the cash consideration will be funded by cash on hand + $42.5m proceeds from the debt issuance in March.

No fractional exchange shares will be issued. For any holders electing to receive the consideration in shares, warrants may only be exchanged for whole exchange shares (the company will round the number).

 

BIOX

The company specializes in crop productivity solutions, including seeds, seed traits, seed treatments, biologicals, high-value adjuvants, and fertilizers.

 

36 COMMENTS

  1. MarkB

    Excellent idea. Interestingly, BIOX is up 5.16% today but warrants are only up 2.96% so unhedged upside has slightly increased.

    The flip side of hedged is that if warrant doesn’t go through but BIOX continues up, it could leave you pretty screwed (though it does further incentivize people to tender if price is going up). Leaning towards unhedged move but open to additional thoughts.

  2. jwestern

    I tried to purchase the warrants today, and my trade was rejected. I called my broker and they said there’s a “symbology” issue with the ticker, and the only way to do the trade is if they do it for me on their backend. Had to wait on hold for about an hour just to get through, and if I want to modify or cancel the order i would have to call again. Broker is Scotia iTrade in Canada.

    If there are similar issues at other brokers, then a lot of people won’t bother trading the warrants.

  3. bigdaddy85

    It would be shocking if this doesn’t go through and is almost mathematically impossible. They only need 12.1 million tendered out of 24m total warrants for this to go through and they already have 11.6m from two large institutions committed. So they only need 500k warrants to tender out of the other12M possible. Oh, and if you don’t tender now and it passes, the company is restructuring the bylaws of the warrants and will only pay out .405 cents per warrant instead of the .45 they are offering now. This deal will happen for sure

  4. nmeile87

    Has anyone been able to find the warrants on IB? What would be the ticker/symbol?

  5. DavidW

    Illiquidity is my main worry as well. What happens when all these converted warrants start selling ?

  6. bigdaddy85

    IB has had a few shares come available to short the past week. I’ve managed to pick off around 5,000 shares to short. They are available but you just have to be patient

  7. MarkB

    Thanks, BD. I haven’t seen any com up yet, but would like to pick some up if I can pick them up. I have a small open position on the warrants, but would like to hedge particularly given the increasing spread. Any insight on what caused the price to jump yesterday?

  8. bigdaddy85

    I didn’t see any shares come available to short at IB but I was still able to sell short some shares. I’m not sure why it worked but it did. So don’t let the display of ‘maybe shortable’ deter you from placing orders to sell short. It worked for me.

    1. dt

      Keep in mind that for hard-to-borrow stocks there is high chances of getting forced to buy-in, potentially at higher prices. And that is an even bigger risk for microcaps such as BIOX.

    1. dt

      If the shares you have borrowed to hedge are no longer available for lending and your broker does not have any other shares to replace those, then your short position will be closed at market prices prevailing at the time.

  9. bigdaddy85

    Assuming this passes on 08/24, any idea from that date how long it usually takes to have our warrants converted to shares of BIOX or cash (if you chose that option)? Any precedent?

  10. bigdaddy85

    Also, IB had 3,500 shares available to short this morning. There is still a 15% spread available between the warrants and the shares

  11. g4734g

    true but once you factor in the spread on the stock and the spread and lack of liquidity on the warrants it evaporates fast……I got in at 52 and out at 59 so a good trade. Will see if there are any folks dumping the warrants at fire sales prices here in the last few days. I do worry about selling once holders get BIOX in there accounts.

  12. Ilja

    Today is the last day to participate in the warrant exchange. 10% spread is still here and some borrow is still available on IB.

    1. bigdaddy85

      I saw on IB last week the final day to purchase shares and be eligible to tender was on 08/20. So that time has passed. The deadline to submit to corporate action is today at 1:00 est. Like you said though, there are shares short available in IB if you already have a position.

      Any idea how quickly we will receive our shares if we tendered? I am hoping this week.

    2. bigdaddy85

      Huge increase in the borrow at IB. Up to over 90 percent now. Anyone know if this is common as the special situation winds down? Hope this doesn’t turn into a forced buy-in and we are issued are shares in the next couple of days.

  13. g4734g

    correct, both fido and etrade saying no protect clause, warrants must be settled. My reading of the offering says if you don’t convert, company will cash you out eventually at .405…….so very perplexed why this is still trading at current 56-57 levels

    1. Tom

      g4734g – Unless you are able to short the warrants (I couldn’t), I think you have to ask yourself if someone wasn’t aware that they should tender their shares are they now going to be aware that they are only worth $0.405 and sell them. I expect most people tendered and hopefully the money doesn’t matter to those that didn’t.

      1. g4734g

        there are another 18,000 crossing today at 58-60 cents…….I am missing something here

        1. bigdaddy85

          It doesn’t make sense to me either. I shorted 10 warrants at Charles Schwab yesterday, just to see if I could, so I’ll monitor this.

        2. MarkB

          Makes no sense! Maybe just blind technical trade strategy?

          Big spike on BIOX today.

  14. nmeile87

    Stock exploding above 6 – unhedged position seems to be a bonus. Hope you weren’t forced bought into your shorts?

    1. lupolupus

      Any expectations for how long it will take to have the shares delivered? They talk about “prompt” delivery, and they do not seem to require SEC registration for the new shares.

      1. bigdaddy85

        I talked to the Information Agent yesterday from the press release, and they said 3-5 days. I don’t know if that’s from the expiration date or the press release

  15. nmeile87

    Nothing received yet – I think I have seen anything from 2 days up to 10 days since I am following specialsituationsinvestments (2018)

  16. Vinn

    I got half of my short position forced close out by IB in the the morning and then at the end of the same day they credited the BIOX shares in my account. Still profit but a bit unfortunate because in the end the forced close out was not necessary that day. I contacted IB about this and they said I can send a claim ticket, to ask for compensation. I don’t give it a lot of chance, since they don’t know when a corporate action finishes and they just have to liquidate uncovered short positions on T+3. I’ll let you know the outcome in case it may help someone in the same situation.

    1. bigdaddy85

      I had the same issue with IB yesterday. They didn’t touch my BIOX short, but they sold off most my other positions. Then suddenly, at 7:00 pm, they issued me back all the shares and forced me out of.

      1. TT

        @bigdaddy85 are you saying all of your other shorts were bought in except your BIOX short? How many positions are we talking about?

        1. bigdaddy85

          Biox was the only short I had on. I had 3 Longs closed on me.

    2. TT

      @Vinn why do are you saying that the “forced closed out was not necessary that day.”?

      1. Vinn

        By SEC regulation they need to close the position on T+3 from what I understand, and that would mean it is ok as long as they close it some time on that day. Since I got my shares from the warrants on the end of that day, the position would have been closed automatically.

  17. Zeek

    Anyone have any idea what happens to the warrants now? I see they are not tradable…

Leave a Reply