Key points:
- Vast Resources' share price crashed 51.8% today, catching many unawares.
- The decline was driven by a bond conversion request worth $500K.
- Investors were surprised by the move despite the verbal assurances from Atlas.
The Vast Resources PLC (LON: VAST) share price crashed 51.8% today after announcing that Atlas Special Opportunities LLC has issued a notice to convert bonds worth $500,000 into ordinary shares despite verbal assurances to the contrary.
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Vast had reassured investors that Atlas Special Opportunities had given a verbal, non-binding assurance that it would not convert any of its outstanding bonds for ordinary shares, which could dilute existing shareholders and put further downward pressure on Vast shares.
However, Atlas Special Opportunities had a change of heart. They decided to convert bonds worth $500K into ordinary shares, probably to take advantage of the recent rally in Vast shares following an impressive operations update.
Investors were unhappy with the move since it indicates that Atlas could convert more bonds in future, given the outstanding bonds are worth $4.15 million. In addition, converting the entire amount could seriously dilute existing shareholders. For example, Vast Resources had to issue 151 million new ordinary shares to meet Atlas LLS’s conversion request.
From another angle, the conversion makes sense for Atlas LLC since Vast Resources shares are likely to keep rising based on recent developments. As a result, the miner deployed two Mantis CMR4 Jumbo Drilling rigs and one Aramine MiniLoader L130D with remote control capability.
Vast Resources is mechanising its Baita Plai mine, translating into higher output and revenues for the miner. However, today’s decline has driven Vast shares towards their multi-year lows hit in late April.
Still, there is hope that Vast Resources shares will rise again, given its positive prospects. However, the looming threat of future dilution from Atlas Special opportunities LLC conversion requests could limit the stock’s gains.
*This is not investment advice. Always do your due diligence before making investment decisions.
Vast share price.
Vast Resources shares crashed 51.81% to trade at 0.6505p, falling from Thursday’s closing price of 1.3500p.
