Aastrom’s (ASTM) Bold Move – Common Stock Exchange for Warrants
Plans to exchange for common stock up to 10M of its outstanding warrants issued in December 2010
The warrants to be exchanged have an exercise price of $3.22 and an expiration date of December 15, 2015. ASTM is exchanging one (1) share of common stock for every two (2) December 2010 warrants surrendered by the warrant holders.
As part of this effort, ASTM completed privately negotiated warrant exchange agreements on the terms with holders of 7,666,666 of the December 2010 warrants. Accordingly, ASTM will issue 3,833,334 shares of common stock.
Later this week, ASTM will also launch an offering to exchange the remaining 2,333,334 December 2010 warrants for common stock <on the same terms described above>. If all of the remaining 2,333,334 December 2010 warrants are tendered, an additional 1,166,667 common shares will be issued for a total of 5M shares of common stock issued in exchange for all of the December 2010 warrants.
The Bottom Line: The purpose of the exchange is to improve the ASTM’s capital structure by … reducing the number of outstanding warrants which have complex and dilutive features which … reduces the number of fully diluted shares by over … 5% if all of the 10M December 2010 warrants are exchanged. Bold moves … this <75%> exchange <today, of a 2 part program> will increase the outstanding shares to 42.5M shares <from 38.76> but, reduce the fully diluted number to 74.1M from 77.9M shares. The cumulated effect … simply stated … is a reduction of a “scare factor and risk” to fundamental investors. Too many RegMed company’s valuations are “muddied” by these overhangs! Warrants have been frequently attached to stock and “unit” offerings as a “sweetener” in <past> equity financings which have been the vehicle forced upon issuers by investment banks. Many times unit offering investors executed the purchase of the share and warrant but, then sold the share keeping the warrant(s) which were detachable … I believe … diminishing the trading opportunity of the share and reducing the viability of the trading volume..
ASTM’s stock closed at …$2.18….on Wednesday, 6/23/12 versus $2.17 down -$0.09 or -4.15% on Tuesday, 6/22/12.