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Technology Stocks : Deswell Industries (DSWL)
DSWL 3.690-0.4%3:50 PM EST
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To: kolo55 who wrote (155)10/4/1997 12:37:00 AM
From: Ron Bower   of 1418
 
Paul,

Would appreciate some remarks on DSWLF if you have time.

Some additional comments to my post on NTAIF thread.

Suppositions: Koo and the other insiders have planned the offering and realize they must come up with cash for their part of it. They start filing 144s to raise the needed cash. Koo files his for 1M shares to not only raise the expected $15M or so of the offering, but to raise some cash to pay debts. This has an adverse effect. The market reaction causes the stock to take a nose dive and if he puts his shares on the block, it will really fall. He would be lucky to come up with the $15M, but more importantly, it would depress the price of the offering and greatly lower the amount of money raised. Not good!!
HE has to withdraw the 144. Now he doesn't have the cash to buy his part of the offering. If he doesn't exercise his portion, the company falls short of the amount of money it wants. His only option is to borrow the money for the offering, file another 144 after the issue, and sell for the cash to pay the debt. The float holders will have little to say about it as they've already put in their money.

If this is the scenario, and I think it's likely, the price will go lower after the offering when his shares hit the market.

I may not be right, but it's something to think about. I know how much you have and don't want you to have a bad read on this. I'm out because it's the only thing I have come up with to fit events.

Comments on DSWLF?
Ron
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