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Warrant Coverage

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Warrant Coverage
A situation in which a company attaches to its stock a percentage of the dollar amount of one's investment in the form of more shares. For example, a person who buys 100 shares at $X per share may receive warrant coverage for a 10%of X, which allows the investor, if he/she desires, to buy 10 more shares at $X. A company may issue warrant coverage as a form of preemptive dilution protection: if it intends to issue more shares, it may issue warrant coverage to existing investors to protect their percentages of ownership up to a certain amount. It does not protect investors from downtrends in the stock, but does protect them from missing out on uptrends. See also: Cum warrant.


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In normal times, a 10% dividend with 100% warrant coverage ($5 billion in warrants for a $5 billion investment) is certainly not what you would expect in a deal with one of the most renowned investment banks in the world.
CMS said in a "decision memo" issued on April 26 it made the decision after determining that the evidence of improved health outcomes in type I diabetic patients who receive pancreas-only transplants was sufficient to warrant coverage.
It covers such deal terms as anti-dilution protection, clawback provisions, next-round financing, cram-downs, overhang problems, warrant coverage and liquidation preferences, discussion of the Stock Purchase Agreement, and model documents, opinion letters and a due diligence checklist.
 
 
 
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