VALENCE TECHNOLOGY (VLNC) Message Board

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Technology Stocks : VALENCE TECHNOLOGY (VLNC)

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To: Rich Wolf who wrote (7670)	1/29/1999 11:08:00 AM
From: Larry Brubaker	of 27311

Rich, the "short with impunity" comment was not meant to suggest they can short an unlimited amount of stock on any given day. It simply means that there is no risk for Castle Creek to short at prices above $6, because they can use the common shares they pick up when they convert the preferred shares to cover their short at a profit. There is no need for them to actually convert the shares to cover until they are forced to convert by the limitations in the agreement (I forget exactly how long they can hold on to the preferred shares). They will probably hold onto the preferred shares as long as they can because they earn interest on the preferred shares. In fact, as Zeev suggests, they can probably play this game several times while they still hold the preferred shares, e.g. short at prices well above $6, if the price falls to close to $6 they cover on the open market (if the price takes off and doesn't fall to $6, they've always got the preferred share conversion to cover), wait until the price goes well above $6 again, short again... As long as they hold the preferred shares, their shorts are covered up to about 2.4 million shares or so.

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