Q: Re your answer on the warrants. High finance seems as clear as mud. If csu wants a deb until 2040 it just needs to never redeem it.
It seems as I only have 30 shares of csu and $40,000 in debs I have to buy 370 warrants. Thus add to my cost base of 105.
On the surface it seems the best course of action is to sell my debs now for the cap gain ( rrif) as I prefer not to add to the cost basis .
I assume csu plans a redemption, why else go through with this exchange.
Thoughts ?
It seems as I only have 30 shares of csu and $40,000 in debs I have to buy 370 warrants. Thus add to my cost base of 105.
On the surface it seems the best course of action is to sell my debs now for the cap gain ( rrif) as I prefer not to add to the cost basis .
I assume csu plans a redemption, why else go through with this exchange.
Thoughts ?
5i Research Answer:
CSU does probably plan to announce a redemption. We would not expect the warrants to have a huge value. Essentially, an investor who needs 'more' warrants to swap debentures needs to spend a bit more to eliminate the possibility of redemption. This still has value, as there will be no capital loss on a debenture. Right now with the debs at $144 (with a 5% gain on yesterday's news) there is a $44 loss (over five years) if the company redeems.