Floorless Preferred Stock/Debenture Message Board

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Strategies & Market Trends : Floorless Preferred Stock/Debenture

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To: Mark Ivan who wrote (865)	8/24/1999 8:32:00 AM
From: RockyBalboa	Read Replies (2) of 1438

The calculus may be different. If they short a number of shares from $2 to $0.2 down in a linear way (just an assumption, a geometric decline is more suitable) and return their loan money of $400k, but have conversion/registration rights for, say 2MM shares at 0.02 (the $400K) - the then applicable conversion price with how many shares do they end: Shares shorted = $400K * (1/2) * ($2 - $0.2) ~ 444K shares. So they would end up with 1.56MM shares AFTER covering their short positions. If the price decline is more geometric (or linear in shorted volume * price) then they would perhaps short more shares in total for $400k but in no case all the shares (or $$$ amount) at the conversion price, 0.2. Again leaving over a number of shares outright with a zero base. Got it?

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