RNE - ReNu Energy

SPP with options

GDY have announced a SPP with a 1 for 1 option thrown in at no cost.
If I take up the SPP, then sell that shares but keep the options I get exposure to the upside with no downside.
I can exercise the option if they are in the money, and leave them alone if not. Whats' wrong with my thinking?
OK the SP will go dwn as a result of the dilution and it might cost me (say) 10% with the price drop & costs etc.

It seems to good to be true and that being the case usually is, so can someone help me with where my thinking is going wrong?

pcd

SPP is lower of 0.50 or 10% below 5 day average

Re: SPP with options

pcd said:

GDY have announced a SPP with a 1 for 1 option thrown in at no cost.
If I take up the SPP, then sell that shares but keep the options I get exposure to the upside with no downside.
I can exercise the option if they are in the money, and leave them alone if not. Whats' wrong with my thinking?
OK the SP will go dwn as a result of the dilution and it might cost me (say) 10% with the price drop & costs etc.

It seems to good to be true and that being the case usually is, so can someone help me with where my thinking is going wrong?

pcd

SPP is lower of 0.50 or 10% below 5 day average

Click to expand...

There is no real fundamental reason why the share price should drop because of dilution. Offcourse there is more shares being issued, But there is also more assets appearing on the balance sheet in the form of cash from the SPP so it sort of cancels out any dilution.

This combined with the company having more secure finances may have a positive impact on share price.

Re: SPP with options

pcd said:

GDY have announced a SPP with a 1 for 1 option thrown in at no cost.
If I take up the SPP, then sell that shares but keep the options I get exposure to the upside with no downside.
I can exercise the option if they are in the money, and leave them alone if not. Whats' wrong with my thinking?
OK the SP will go dwn as a result of the dilution and it might cost me (say) 10% with the price drop & costs etc.

It seems to good to be true and that being the case usually is, so can someone help me with where my thinking is going wrong?

pcd

SPP is lower of 0.50 or 10% below 5 day average

Click to expand...

How about some details...what's the conditions of the options and what price is the SSP going for, how much are they raising etc etc etc.

Re: SPP with options

So_Cynical said:

How about some details...what's the conditions of the options and what price is the SSP going for, how much are they raising etc etc etc.

Click to expand...

I'm not really sure how / why that is significant (actually if I did know why it was significant, I'd probably not be asking the question!).

Here goes.

SPP is lower of $0.50 or 5 day average (@17/12/2010) - 5%
Exercise price on the option is 0.55, expiry 31/3/2012, cost $0
Maximum number of shares to be raised 88m - current shares issued 293m.
They may be raising a further 60m shares + 60m options next year (Possible Placement).

pcd

Re: SPP with options

pcd said:

I'm not really sure how / why that is significant (actually if I did know why it was significant, I'd probably not be asking the question!).

Here goes.

SPP is lower of $0.50 or 5 day average (@17/12/2010) - 5%
Exercise price on the option is 0.55, expiry 31/3/2012, cost $0
Maximum number of shares to be raised 88m - current shares issued 293m.
They may be raising a further 60m shares + 60m options next year (Possible Placement).

pcd

Click to expand...

Are they putting the money in there pocket?
Why do they need to raise a further 60m shares plus options?

Re: GDY - Geodynamics Limited

Could talk of a carbon tax help Geo and possibly bring some life back into this thread?

Re: GDY - Geodynamics Limited

teabagger said:

Could talk of a carbon tax help Geo and possibly bring some life back into this thread?

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A carbon tax would certainly have the effect of raising the value of wholesale electricity and hence fututre earnings from any Australian project GDY actually brings on line.

Re: GDY - Geodynamics Limited

Smurf1976 said:

A carbon tax would certainly have the effect of raising the value of wholesale electricity and hence fututre earnings from any Australian project GDY actually brings on line.

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I'm suspecting that a carbon tax will work very differently than a ETS with credits...the devil will be in the detail.

Re: GDY - Geodynamics Limited

So_Cynical said:

I'm suspecting that a carbon tax will work very differently than a ETS with credits...the devil will be in the detail.

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Agreed. But if it doesn't have the effect of increasing the cost of generating electricity from coal then, from an environmental perspective, the tax would seem to be somewhat pointless.

The generally accepted price for new coal or gas-fired generation is in the order of 4 cents per kilowatt hour at the power station. This includes costs of construction, operation, fuel etc. Presumably, a tax on CO2 emissions from such a plant would lead to higher costs. (Presumably... we're dealing with government here!).

Re: GDY - Geodynamics Limited

Smurf1976 said:

Agreed. But if it doesn't have the effect of increasing the cost of generating electricity from coal then, from an environmental perspective, the tax would seem to be somewhat pointless.

The generally accepted price for new coal or gas-fired generation is in the order of 4 cents per kilowatt hour at the power station. This includes costs of construction, operation, fuel etc. Presumably, a tax on CO2 emissions from such a plant would lead to higher costs. (Presumably... we're dealing with government here!).

Click to expand...

On the tax side of the legislation i agree totally, generation from coal will get more expensive for sure as the emissions will be taxed...its the credit side of the legislation that's the worry...if all Kyoto compliant actions that resulted in emissions reductions are honoured then it means a lot of money will flow to the gas generators with Kyoto compliant gas generation units.

Even a mob like GDY could miss-out if Kyoto commitments are not honoured...they will probably just replace any Kyoto credits with some sort of funding arrangement or tax break. :dunno:

Re: GDY - Geodynamics Limited

I bought GDY quite some ago, thinking I would hold for the longer term. I also bought some very cheap stocks with geothermal interests. The plan was GDY prove the concept and the cheapies go for a ride, and follow GDYs rise.

NOT the bloody other way around.
GDY got down to 25c today.

Another one for the lessons learned file.

Re: GDY - Geodynamics Limited

I'mi n the same boat as you jbocker, GDY have gone nowherebut down for a couple of years. It doesn't seem like much is being achieved in the cooper basin at the moment.

I thought it may of had support at 30cents but most of the market has droppd and GDY has done the same. Not to sure how low it will go.

Trav

Re: GDY - Geodynamics Limited

jbocker said:

I bought GDY quite some ago, thinking I would hold for the longer term. I also bought some very cheap stocks with geothermal interests. The plan was GDY prove the concept and the cheapies go for a ride, and follow GDYs rise.

NOT the bloody other way around.
GDY got down to 25c today.

Another one for the lessons learned file.

Click to expand...

GDY 14.5 cents
I think 1 of my 'cheapies' (EDE) will overtake it soon.
I wonder if this Geothermal technology will be voted fraccing useless or is this the result of a savage market on innovative technology stocks.

Re: GDY - Geodynamics Limited

I have to wonder about the events of yesterday, this stock has been declining almost a cent or 1/2 cent every day for months now - 39.5c on 21/2/11, and as low as 12c yesterday (28/6/11). There has been no reason for it, e.g. no news, yet no news it not bad news, however I am not blind enough to think no news means good news.

However, the fall away has been with no explanation, no word from the board, no word from anyone. All the analyst's (cough cough splutter splutter) gave up the ghost with any comment a long time back and yet the stock falls. Its only when that corrupt and inept lumbering beast - the ASX - wakes up one morning and thinks ... "mmm, maybe we should do our job and request some information on the fall in price". GDY says "Ohhh, but Mr ASX man all is well and all is on track" and off goes the share price ---> up!

So, what has been going on? It has had nothing to do with tax loss selling as this has been going on to long, and the falls are not significant. That is no one event can be held accountable. The climate debt has nothing to do with it - as if things remain the same they do well, and if the ALP/Greens get their way then GDY can expect more. So a bit of a win win situation as far as I can see. The financial crisis while an excuse for my lost cat to countries going broke is not an excuse. So what has gone on? They dont register on the shorting table's, so I wonder, I just wonder, and maybe I might ask the other inept lumbering beast – ASIC - to have a look and ask a question or 17 of them, the most important few:

1. Given the substantial decline in your share value since 21/2/11, and over the longer term since the 22/10/11 (then 63.5cents) why have you not addressed the market to make comment on the share price and what the company is doing?
2. Have any options expired at a rate close to the lowest range (share range that is) or have any executives exercised their right to buy at low rates? Ohhh, yes I am implying that the company has allowed the share price to decline for gain – who’s I don’t know, yet in the absence of any event or reason for a decline then you have to look at some of the most serious possible reasons. Anyone remember ABC Child Care? BNB? CNP? Etc.

Maybe a few more companies should be held significantly more accountable for the companies behaviour.

Ohhh ... yes I own these, at varying prices and happy to hold for the long term as I believe there is value, however I get concerned when I just see my money washing away for no reason.

Re: GDY - Geodynamics Limited

Must agree with you here,ASX should be intervening. I have been watching this bunch for the past 2 years but everytime I want to pull the trigger the sp is further South than the day before. Will they become a take over target?

I will pull the trigger at 10c if it gets that low because I feel that it is then severely undervalued. The problem with 10c is that if it cannot find support at 10c it will probably be 5c in quick time

Happy watching

Re: GDY - Geodynamics Limited

Maybe it's because after millions of dollars and over 7 years of drilling and have still not come close to producing enough electricity to power night light. How long can investors wait, This one is in the hands of the speculaters at the moment and when speculation is at play you will always see action that defies logic.

To be honest I can't see any real value growing until cashflow starts coming in, and who knows when that will happen, It's not really investment grade till that happens.

If you buy in you will have to be prepared to wait a long time to see results, an hope of a short term gain is pure speculation.

Re: GDY - Geodynamics Limited

I am of the opinion that most Geo thermal stocks are in the same boat. Some have moved backwards faster than others. Until sample projects are on board and things become more tangible these are purely trading a stocks. I hold Hot rocks but will wait before I pull the trigger on this one

Re: GDY - Geodynamics Limited

Tysonboss1 said:

Maybe it's because after millions of dollars and over 7 years of drilling and have still not come close to producing enough electricity to power night light. How long can investors wait, This one is in the hands of the speculaters at the moment and when speculation is at play you will always see action that defies logic.

To be honest I can't see any real value growing until cashflow starts coming in, and who knows when that will happen, It's not really investment grade till that happens.

If you buy in you will have to be prepared to wait a long time to see results, an hope of a short term gain is pure speculation.

Click to expand...

Ohhh, I agree with you on this. However, they seem to have acheived more in the last 12 months than they did the previous 5yrs, so the share price decline is a rather strange one. It has been clear nothing would be produced - such as the polit plant - until 2012, so it just seems strange that "investors" got sick of them approx. 3 months ago, and the decline (the amount per day) seems just a little strange as well.

Almost the same amount each day - with no "up" at all, its all down, and its the same number of (approx.) shares each day. Not suggesting a conspiracy, yet its just a little more odd than other stocks I see people give up on, or there being no news or developments and the price slips.

This is/has been one of those very odd stock movements, for me anyway.

Re: GDY - Geodynamics Limited

Report out, Nothing substantial

Keep watching

Re: GDY - Geodynamics Limited

Just out of fairness, where was the ASX yesterday with a 33.33% gain for no reason? And the ASX wonders why they might be in trouble when some competition arrives soon!