Q: Can I please get your thoughts on the recent press release?
Vecima Networks Inc. (the "Company" or "Vecima") (TSX: VCM) today announced that it has entered into a warrant agreement with Charter Communications Holding Company, LLC ("Charter").
The warrants issued as part of the agreement provide Charter with the opportunity to purchase an aggregate of up to 361,050 common shares in the capital of Vecima at an exercise price equal to C$17.09 per warrant (the "Warrants") until January 1, 2031. The Warrants are subject to vesting conditions based on the achievement of significant multi-year spending targets by Charter.
Vecima Networks Inc. (the "Company" or "Vecima") (TSX: VCM) today announced that it has entered into a warrant agreement with Charter Communications Holding Company, LLC ("Charter").
The warrants issued as part of the agreement provide Charter with the opportunity to purchase an aggregate of up to 361,050 common shares in the capital of Vecima at an exercise price equal to C$17.09 per warrant (the "Warrants") until January 1, 2031. The Warrants are subject to vesting conditions based on the achievement of significant multi-year spending targets by Charter.
5i Research Answer:
VCM and Charter have a partnership, and it is not unusual for companies to take equity positions in their partners. However, this one is a bit unusual, in that VCM does not get any money right away (as they are warrants) and may not even for eight years (to expiry). Also, for a $381M company, it is not a significant amount of money. Our guess here is that VCM wanted more of a committment from Charter, and Charter did not really want to put out any current cash. We would not really see this news as particularly material.