KMG Put fun

Agreed. The average price of the tender price plus the aftermarket price will be close to the current market value of KMG.

But, if you do not tender, then you are left with stock that is below the price of the current value of KMG.

Thus, you must tender in order to get the average value of the current value of KMG.

Therefore, if you do not tender you are an IDIOT.

End of proof.

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In addition, when you tender your stock the shares are sent to the depository.

You will not know what the final pro-ration numbers are until after the tender offer.

Most likely, the NYSE will begin trading in KMG When Distributed Shares during the period of time when the shares are being held at the depository until the shares are returned to the shareholder (stock not accepted for tender).

End of proof.


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Moral of the story, there is no free lunch.

 

I see your point about tendering. Of course, you could simply sell it all now and be done with it, which is the alternative I was thinking of.

The shares left over are not 'new shares', and I never heard of a seperate class of stock 'When Distributed'. You sure on that?

And you still didn't answer my question about shorts being called in

 

No clue about when the stock will or will not be called in. I just know that it is not optimal for a person not to tender. Thus, I would expect that most of the float will be tendered before the tender expires.

The when distributed stock will convert to regular way KMG after the depository returns the shares. It would be up to the NYSE to list the when distributed shares. We will see in the next week or so if they do.

 

This came from the OCC adjustment memo for KMG:

POSSIBLE DELAYED SETTLEMENT

After the Offer expires, it is possible Kerr-McGee Corporation (“KMG”) Common Stock may begin to trade on a when-distributed basis on the NYSE. Should this occur, OCC may delay settlement of KMG/YNK/OGM options exercise until a settlement date for when-distributed trades is determined.

 

Yet another fly in the ointment where the market makers probably have knowledge of whats to come and we don't.

 

If I'm so smart , how come I'm not rich.

KMG just went unshortable today on IB. I will assume buy ins are not far behind. If anyone knows of it, post.

 

For an unshortable stock it is certainly taking a hit in the last day or so...I'd hate to have speculated on this one -- looking at it right now..

 

the synthetic is still at a discount, but you can't secure stock.

 

Sometimes I really wonder about myself. I got so wrapped up in the tender I forgot to notice that oil futures got slammed today.

 

The stock was shortable until today, the question is , would you be able to KEEP the short through the tender.

Thus, I, conservative trader that I am, passed this easy free money.