Sep. 15 at 6:24 PM
$PBF What the capped calls do
PBF used some of the offering proceeds (reported as roughly
$25 million) to buy capped call transactions from banks/counterparties. These are essentially call options that PBF holds.
They have a cap price of
$123.20 (a 75% premium over the
$70.40 reference price).
If the stock trades between the exchange price (~
$96.80) and the cap (
$123.20) when notes are exchanged, the capped calls deliver shares (or cash equivalent) to PBF that offset the shares it would otherwise have to issue.
Net result: little or no dilution to existing shareholders until the stock exceeds
$123.20.
Only if PBF’s stock rises above
$123.20 does net dilution begin to appear (the offset from the capped calls stops at that level).Why this protects existing shareholdersThe notes themselves only become dilutive above ~
$96.80.
The capped calls push the actual economic dilution threshold much higher—to
$123.20 (75% above the pricing-day stock price).
Existing shareholders are...
