Q: Do you know of any reason why the shares of Fortuna dropped so much this morning. The only news I can find relates to some Notes that are being issued and some other Notes being retired.Thanks
5i Research Answer:
Convertible debentures typically result in stock prices declining, at least in the short term, as investors worry about dilution and arbitrageurs step in (buy the debenture, short the stock). In this case, while FVI is also retiring debt, investors may be concerned about the size of the issue as well as potentially a higher coupon/lower conversion price (full terms not yet set). The reaction is a little more harsh than we might have expected, however.