Compagnie Financiere Richemont - Warrant Expiration
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On 16 October 2020, Richemont confirmed the issue of tradeable warrants to shareholders, allowing them to either trade the warrants or acquire new CFR A shares in November 2023 at CHF67 (or equivalent rand value) per CFR A share. Investors at the time received two warrants per CFR A share held.
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Between 17 November and 21 November 2023, warrant holders will have the option to buy more CFR A shares at CHF67 (or equivalent rand value) per share for every 67 warrants exercised. Thereafter, the warrants will cease to exist (lapse). The warrants will be tradeable up until 15 November 2023, meaning warrant holders can sell them in the market up until this date.
Trading the warrants will trigger a tax event in the form of the disposal of the warrants against a nil cost. The exercise of the warrants will not trigger a tax event and the new CFR A shares acquired will carry a cost of the equivalent rand value of CHF67 per share.
FNB Stockbroking and Portfolio Management View
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If no election is made or the warrants are not sold in the market on or before 15 November, the warrants will cease to exist (lapse). It is important for investors to understand that the warrants have value, and they should not be allowed to lapse. Investors must either exercise the warrants or they must sell the warrants in the market.
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We prefer that investors sell the warrants in the market. Using our estimates of the rand/CHF exchange rate around the exercise date, the warrants are trading close to fair value.
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Investors who opt to exercise the warrants must be cognisant of the additional cash investment required to increase their exposure to Richemont.
