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If the notes are convertible, QNTM does have the authorization to and will issue more stock for those converting their notes into common stock.
However, the fully diluted earnings that QNTM (or any company) reports takes into account convertible bonds, rights, warrants, and other issues by the company that are convertible into shares of common stock. Therefore, EPS are not further diluted in that the figures released last quarter already took into account these previously issued convertible securities.
By the way, these convetible bond holders are getting quite a deal. For a $1,00 bond they get 89.606 shares of stock which equals $2,329 if QNTM is at $26. (See the portion of the press release below that notes this!)
Prior to 5:00 p.m., Central Standard Time, on March 3, 1998, holders may convert their Notes into shares of Quantum's Common Stock at a price of $11.16 per share, or approximately 89.606 shares of Quantum's Common Stock per $1,000 principal amount of Notes. Cash will be paid in lieu of fractional shares. On February 11, 1998, the last reported sale price of the Quantum Common Stock on the Nasdaq National Market was $26.375 per share. |
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