Prosafe SE's Warrant Exercise Deadline: Avoid Dilution or Miss a Recovery Opportunity

Cyrus ColeFriday, May 16, 2025 1:31 am ET
62min read

The clock is ticking for Prosafe

shareholders: the May 16 deadline to retain warrants that could either shield equity stakes from catastrophic dilution or vanish into oblivion is just days away. This is a binary moment—exercise at EUR 0.01 per share to participate in a potential recovery, or risk losing your ownership claim entirely if the Q3 2025 recapitalization succeeds. The stakes are existential, and inaction guarantees regret.

The No-Regrets Decision Framework

Prosafe’s recapitalization plan hinges on converting USD 193 million of debt into equity, which would hand lenders 90% of the company post-transaction. Existing shareholders will retain just 5% of equity unless they exercise their penny warrants to claim an additional 5%. With a subscription price of EUR 0.01 per share, this is effectively a free option—but only if shareholders hold shares through May 16.

Why Exercise is a Must:

  1. Dilution is a certainty if the recap succeeds.
  2. Non-participating shareholders will see their ownership diluted to a fraction of current levels.
  3. The math is stark: lenders gain 90%, shareholders keep 5% without warrants—a 95% haircut.

  4. The EUR 0.01 price is a rounding error.

  5. Even if Prosafe’s shares are valued at EUR 0.10 post-recap, the warrant’s intrinsic value becomes EUR 0.09.
  6. The upside-to-cost ratio is infinite—literally.

  7. 54% shareholder support is a tailwind, not a guarantee.

  8. Majority support signals alignment on the recap’s necessity, but final approvals (including an EGM on May 16) are still pending.
  9. Lender agreements and a USD 30 million cash injection provide liquidity, but execution risks remain.

The Risks: A Recap Failure Could Wipe Warrants Entirely

The flip side of this binary outcome is that if the recap fails, warrants expire worthless. Key risks include:
- Timeline pressure: The July 31 waiver on liquidity covenants is a hard stop. Delays beyond this could void the recap and warrants.
- Debt terms: The new SOFR + 11% interest rate (with 9% payable as PIK interest) strains cash flow, even with USD 80 million in projected liquidity.
- 54% shareholder support isn’t 100%: The remaining 46% could reject terms, derailing the plan.

The Bottom Line: Act Now or Permanently Lose Control

The calculus is clear:
- Exercise the warrants by May 16: Secure a 5% equity stake (expandable to 10% via warrants) in a recapitalized Prosafe.
- Hold shares past May 16: Risk losing all influence if the recap succeeds.
- Sell before ex-date (May 19): Exit with minimal dilution risk but forfeit the warrant opportunity.

This is a zero-cost option with asymmetric upside. The EUR 0.01 price creates a “heads I win, tails I break even” scenario. Shareholders who miss the May 16 deadline are gambling their equity on the recap’s failure—a bet against 54% of the shareholder base and secured lenders.

Final Call to Action

The ex-date on May 19 means shares will trade without warrant rights starting May 20. For those holding shares:
1. Confirm your broker has you registered as of May 16.
2. Pre-approve warrant exercises to avoid missing the window.
3. If unsure, sell before May 19—do not let indecision cost your equity claim.

Prosafe’s future is binary: recap success means survival and potential recovery, failure means liquidation. By retaining warrants, shareholders position themselves to participate in either outcome. To ignore May 16 is to cede control of your investment—a mistake you’ll regret if the company survives.

The clock is ticking. Act now.