How dilutive could the $1.50‑per‑share warrants be if they are exercised, and what impact might that have on existing shareholders' equity?

Short answer:

The warrants could be dilutive, but the exact magnitude cannot be quantified from the press release alone because the number of warrants (i.e., the number of shares that could be issued on a $1.50 exercise) is not disclosed. What we can say with certainty is that every warrant that is exercised will:

1. Create new ordinary shares (one share per warrant).
   
2. Bring in cash of $1.50 per share, which adds to the company’s equity capital.
   
3. Reduce the ownership percentage of every existing shareholder because the total share count will rise.

Below is a step‑by‑step framework that shows how you would calculate the dilution and the impact on shareholders’ equity once the missing data (the total number of warrants) become available, together with a set of illustrative “what‑if” scenarios that use publicly‑available proxy numbers for Sonder Holdings Inc. (NASDAQ: SOND).

1. How to calculate dilution from the warrants

What you need to plug in:

* The current share count (S₀) – publicly available from the most recent 10‑Q/10‑K filing.

* The total number of warrants issued (W) – this is disclosed in the financing agreement (or can be derived from the total proceeds of the financing if the price per unit is known).

2. Proxy data for Sonder (as of the most recent filing before Aug 8 2025)

Because the press release does not disclose the per‑unit price (i.e., the amount of the note per unit), we have to make a reasonable assumption to illustrate the scale of the warrant pool.

Reasonable assumption for illustration

Suppose each senior secured note has a principal of $1,000 (a common size for private‑placement notes).

Then the number of units (and therefore the number of warrants) would be:

[
\text{Units} = \frac{\$24.54\text{ M}}{\$1,000} \approx 24,540 \text{ units}
]

So W ≈ 24,540 warrants.

3. Illustrative dilution scenarios

*The “effect on book‑value per share” is simply the cash proceeds divided by the new share count. It assumes no other balance‑sheet changes and ignores the accounting expense for the warrant itself, which would be spread over the life of the warrant. The figure is therefore a rough illustration of the incremental equity contributed per share.

What these numbers mean

• Even in the most aggressive plausible scenario (≈ 250 k warrants), the dilution to current shareholders is just over 1 %. That is modest compared with typical financing rounds that issue new common stock, preferred stock, or convertible securities.
• The cash infusion from the exercise ($1.50 per share) is small relative to the $24.54 M already raised via the senior secured note. The primary purpose of the warrants is to make the note more attractive to investors, not to generate a large new cash injection.
• Share‑holder equity will rise by the cash received on exercise, but the total number of shares will also rise. The net effect on share‑price or book‑value per share is therefore likely to be neutral to slightly positive, because the $1.50 cash per share adds the same amount to equity per share that is being created.

4. Potential impact on key metrics

5. Qualitative considerations

1. Exercise price vs. market price –
   
   If Sonder’s stock trades *above $1.50, the warrants are “in‑the‑money” and investors are likely to exercise them, creating the dilution described above.*
   
   If the stock trades *below $1.50, the warrants will stay unexercised and no dilution occurs (the warrants would simply expire worthless).*

2. Timing of exercise –
   
   The senior secured notes mature on July 4 2026. Often, warrants attached to such notes have a limited exercise window (e.g., they can be exercised any time up to the note’s maturity). If the company’s share price is volatile, the actual number of exercised warrants could be far lower than the maximum W.

3. Strategic purpose –
   
   The issuance of warrants is a standard “sweetener” for secured debt offerings. It reduces the effective interest cost to the company (investors accept a slightly lower coupon because they have upside potential) while providing a modest “equity kicker” to investors if the stock performs well.

4. Overall dilution risk –
   
   Compared with a straight equity raise of a similar size (e.g., issuing $24.5 M of common stock at $10 per share → ~2.45 M new shares, ~10 % dilution), the warrant component is very low‑risk from a dilution standpoint. The bulk of the financing is debt, which carries interest‑expense risk but not equity dilution.

6. Bottom‑line answer for the question

How dilutive could the $1.50‑per‑share warrants be if they are exercised, and what impact might that have on existing shareholders' equity?

The warrants will be dilutive only to the extent that they are exercised, and the dilution amount equals the number of warrants divided by the post‑exercise share count. Because each unit contains *one warrant, the maximum number of new shares equals the number of units sold, which—based on a plausible $1,000 note size—appears to be on the order of **tens of thousands of shares (roughly 0.1 % of the existing ~23 million shares). Even if the note size were smaller, the dilution would likely stay well under 2 %.*

When exercised, each warrant brings $1.50 of cash into the company. This cash increases shareholders’ equity dollar‑for‑dollar, partially offsetting the dilution of ownership. In practical terms:

Thus, the overall impact on existing shareholders is modest: a tiny reduction in ownership percentage, offset by a very small increase in book value per share. The real driver of any change in shareholder value will be how the company uses the $24.54 M of senior secured debt (interest expense, capital allocation) rather than the warrant‑related dilution itself.

What to watch moving forward

By monitoring those pieces of information, investors can keep the warrant‑related dilution in perspective and focus on the broader financial health of Sonder Holdings Inc.