If it doesn't have a specified fixed conversion price, then it is floorless.
lesser of $1.00 per share or 65% of the average daily bid price for the
five
trading days immediately prior to conversion.
Once again you are slanting things. Where doese the FLOORLESS COME IN?
So if we use 40 cents as a five day average, then 65% of 40 cents = 26 cents.
$4,000,000 divided by 26 cents = 15,384,615 shares.
So right now, the holders of the debentures can safely short 15 million shares.
But watch.
Let's say they do short those 15 million shares and get $6,000,000 from the proceeds of the short sell.
Then the stock drops to 30 cents
30 cents x 65% =19.5 cents per share.
4 million $ divided by 19.5 cents = 20,512,820 shares.
so they can short yet another 5.5 million shares (safely)
Guess what, with all of that selling.
the stock drops to 20 cents.
20 cents x 65% = 13 cents.
4 million divided by 13 cents = 30,769,230 shares.
oopps they can short another 9.5 million shares now.
this brings it down to 10 cents
10 cents x 65% = 6.5 cents.
4 million divided by 6.5 cents =61, 538, 461 shares.
They convert.
Cover the 30 million they are already short.
and they have 30 million shares owned.
Great deal. look how much money they received from the short sells.
15 million at 40 cents =$6,000,000
5.5 mill at 30 cents = $1,650,000
9.5 mill @ 20 cents = $1,900,000
grand total after converting = $9,550,000
plus they have 30 million shares at 6.5 cents or $1,950,000
Great deal, eh! |
