Penny Warrants vs Stock Issuances
I'm looking through Buffet's purchase of Media General. He provided the company a $400m term loan and penny warrants for 4.65 million Class A shares. I am not so clear on the difference between penny warrants and stock issuance in this context. Why would he not have just asked for 4.65 million Class A shares? If the exercise price is $0.01 (let's just say it's effectively $0), isn't it the same thing as just issuing equity? Is there an implication with tax that I'm not understanding?
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