Yes its in the agreement.
"if the average (without rounding) of the closing prices of Triarc's Class A Common Stock on the New York Stock Exchange ("NYSE") on the NYSE Composite Tape for the 15 consecutive NYSE trading days ending on the NYSE trading day immediately preceding the closing date (the "Average Triarc Share Price") shall be less than $18.875, then the Conversion Price shall be adjusted so that it shall equal the quotient obtained by dividing (A) $3.25 by (B) the Average Triarc Share Price"
So to the extent that the 15 day average represents the current TRY price, we are guranteed $3.25. (We would actually get more if the average is below the current price, and of course less if the average is above.)
Another detail is that "Triarc may terminate the Merger Agreement if the Average Triarc Share Price is less than $15.00. In such event, Triarc has agreed to reimburse Cable Car for up to $225,000 of expenses incurred by it in connection with the Merger Agreement and the transactions contemplated thereby."
So when you ask "if TRY plummets, where are we?" - it depends. If it plumments below $15, then the merger may be off (note it says that TRY "may terminate", not "will terminate". Either way, no matter how low it drops, unless the merger is terminated, the ratio is adjusted to give us $3.25.
On the other hand, keep in mind that it is the 15 day average of TRY that determines whether or not the ratio is adjusted to provide the $3.25 minimum. So if TRY plumments a day or two before the merger such that the 15 day average does not drop below $18.875, then we are screwed. For example (extreme and unrealistic, but to demonstrate the point): Say TRY trades along @ $20 for 14 days, but on the last day before the merger, drops to $5. In this case, the 15 day average would be $19 and the ratio would not be adjusted. In this scenario, we still get .1722 TRY per DRNK share, or a value of $0.86.
-dam
PS: when I say that we will get $X for our shares, what I mean is that we will get $X worth of TRY shares, (which of course can be sold for $X). |
