Current pricing gap
The two private‑placement transactions give us a clear “market‑derived” price for the Series C convertible‑preferred shares:
| Transaction | Proceeds | Shares issued | Implied price per preferred |
|---|---|---|---|
| Debt‑for‑equity swap | $10,000,000 | 15,000 | ≈ $667 per share |
| Direct cash raise | $999,900 | 1,111 | ≈ $900 per share |
The preferred is therefore trading in the $650‑$900 range. By contrast, ECDA’s common equity has been hovering around $5‑$7 per share on Nasdaq (the latest quote at the time of writing). Even allowing for a 1‑to‑1 conversion ratio (which is the most generous assumption for the preferred holder), the preferred is priced at roughly 100‑180 × the common share price. The actual conversion ratio disclosed in the prospectus is likely lower (e.g., 10 common per preferred), which would push the implied common‑share value even higher and would place the preferred at a several‑hundred‑percent premium to the current common market price.
Implications for traders
1. Convertible‑preferred premium – The market is rewarding the preferred for its senior liquidation preference, dividend protection and the option to convert at a pre‑set ratio. This premium is unusually large, suggesting limited supply and strong demand for the “senior” capital structure. Expect the preferred to stay firmly above the common until conversion terms become attractive or the common price rallies sharply.
Arbitrage opportunity – If the conversion ratio is disclosed (e.g., 10 common per preferred), the implied conversion value would be $6,670 – $9,000 per preferred, dwarfing the current $650‑$900 price. In that scenario the preferred is under‑priced relative to its conversion floor, creating a classic convertible‑arbitrage play: buy the preferred, short the common (or buy a delta‑neutral hedge) and capture the spread as the conversion window approaches.
Risk considerations – The premium can evaporate quickly if the company’s fundamentals weaken (e.g., slower restoration demand, higher financing costs) or if the conversion ratio is highly dilutive. Keep a tight stop on the preferred (around 10‑15 % below the $650‑$900 level) and monitor the common’s momentum; a sustained break above $8‑$9 could trigger a conversion‑driven rally, compressing the premium.
Actionable takeaway – For short‑to‑medium‑term trades, treat the Series C preferred as a high‑yield, low‑volatility instrument that trades at a substantial discount to its conversion value. Consider a long‑preferred / short‑common pair if you can lock in the conversion ratio, or simply hold the preferred for income and potential upside while the common remains suppressed. Keep an eye on any filing that reveals the exact conversion formula – that will be the key catalyst for price convergence.