Rande, here is where I get the floorless feature from:
" If the market price of the Common Stock at the date of conversion is less than the conversion price, the Company shall have the option either to pay the holder in Common Stock at a fifteen percent discount to the market price or in cash in an amount equal to 110% of the principal amount to be converted (115% if conversion occurs after 210 days following the date of the agreement).
It says it quite clearly, if the stock drop under the conversion price ($5.55, I believe) it becomes floorless. The debenture holders have a ceiling of $5.55 thus they go into the market here and short $2.5 worth of stock (or about 350,000 shares), they get all their money back, keep being paid interest of 9% without having money at risk, and their own selling will create pressure on the price. If it drops under $5.5 they can short more and keep the pressure on. I believe this is a dangerous situation and unless you have very good reasons why you think the stock should not suffer from the floorless presence, now would be a good time to take your profits. Rande, as I said, I know nothing about the company's operation, but a floorless is too often a death sentence, I do not think that it is worth taking that risk.
Zeev |
