Bill Wexler's Trading Cabana Message Board

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Non-Tech : Bill Wexler's Trading Cabana

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To: Judge17 who wrote (3405)	3/24/2008 7:40:13 AM
From: RockyBalboa	Read Replies (1) of 6370

I´d kindly suggest to rethink the terms: "risk free": If I have a (senior) subordinated bond which must be priced at 12% and is convertible at a discount, with sweeteners, this implies a whole lot of risk. That risk can only be laid off by selling a whole lot of shares. Even for a stock like TMA which has some volume, a billion shares is not easy to sell at that price. To whom? The investor has the daily risk, unhedged that TMA goes belly up the other morning. So the investment will remain illiquid for some time. Then I know few investors who would the deal for 12%. The ROI expectations must be in the 35% area given the inherent risks of the company. Extra bonus: They are popular in these days: Luminent also issued a whole lot of warrants with 1c strike; JPM got an option to buy 20% of BSC at $2 etc...

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