Some investors asked us to explain how the “WARRANT DOMINION HOSTING HOLDING 2016-2021” (ISIN IT0005203689) works in practice, making some examples.
As a premise, we invite everybody to read the official KID related to the warrant, which is available on our website at the address https://www.staging.dhh.international/corporate-documentation/.
The KID includes a complete explanation of the financial instrument while the simulations made below are unofficial and taken from the management accounts.
Starting point
In our simulations, we consider 3 scenarios where you buy 1.000 warrants at 0,50 Euro/warrant (that is approximatively the historical price of the warrant in the last 3 months), and you convert it at 3 different prices:
1) Monthly Average Price of 12,5 Euro;
2) Monthly Average Price of 15 Euro;
3) Monthly Average Price of 17,5 Euro.
Please remember that the strike price to exercise the warrant is 11,50 Euro/share.
Scenario 1: you buy 1.000 warrants at 0,50 Euro/warrant, and you convert it at 12,5 Euro/share
In this case, you get 81 new shares. If you sell them at 12,5 Euro/share you paid 500 Euro for the warrants, then you realized a gross capital gain of approx 1.000 Euro (+100%).
Scenario 2: you buy 1.000 warrants at 0,50 Euro/warrant, and you convert it at 15 Euro/share
In this case, you get 235 new shares. If you sell them at 15 Euro/share you paid 500 Euro for the warrants, then you realized a gross capital gain of approx 3.500 Euro (+600%).
Scenario 3: you buy 1.000 warrants at 0,50 Euro/warrant, and you convert it at 17,5 Euro/share
In this case, you get 345 new shares. If you sell them at 17,5 Euro/share you paid 500 Euro for the warrants, then you realized a gross capital gain of approx 6.000 Euro (+1100%).
As a final not, it is important to remember that the last available Monthly Average Price for June 2018 was 6,57 Euro/share (ref. “Press release – July 2, 2018”).
This means that at present the warrant is not exercisable.
To learn more about the financial instrument, please refer to the official KID.