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Gold/Mining/Energy : Harken Energy Corporation (HEC)
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To: Thomas M. Carroll who wrote (3148)7/7/1998 10:10:00 PM
From: drjoedoom  Read Replies (1) of 5504
 
Zeev et al. --

The "floorless" forms of convertible are clearly an attractive investment for those who are bullish on a company's prospects. If the company succeeds, returns are great.

Two issues:

1. If the company fails, I see no way the holder manages to do any better than merely recouping the original investment.

Please explain to me how the holder profits from shorts?

2. Various posters have mentioned examples of companies that went under after doing this form of financing. So far, I've researched only a few of these examples. In each case, the preferred was just a side show as the company failed on its own (de)merits.

Please give me just one example of a company that was ruined by the convertible preferred rather than by the business situation itself.

Thanks

Joe
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